Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Dietary Supplements

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]

Mr. Mark Todd: I am glad to see such a healthy attendance so early in the morning.
My motivation in choosing this subject for debate stems from two concerns. First, two companies in my constituency are manufacturers of herbal remedies, vitamins and minerals. One, a very small company, is worried about the potential impact of regulation of the sector that might affect its business. The other company is much larger, but its anxieties are real too.
Secondly—like, I am sure, many other Members—I have been lobbied by consumers in my constituency about last year's proposed reduction in maximum permitted levels of dosage of vitamin B6. I think that we all remember the postbags that we received then. As vitamin B6 was classed as a food at the time, the Select Committee on Agriculture, of which I am a member, reviewed the Government's proposals. Our firm view was that the proposed regulation of the dosage was unjustified. Such evidence as there was that excessive consumption might pose a risk had been heavily criticised by scientists. No one taking vitamin B6 had complained of ill effects, despite the massive publicity given to the subject for several months—and, internationally, for longer.
If, as was claimed, the issue was purely one of safety, there was no real evidence to support intervention. There are two possible grounds for intervention: safety and need. Is the product effective in meeting a person's requirements? Does anyone need it? Are unjustified claims being made about the need for it? Let us begin with safety, however. As the Committee's report observed, as a society we allow many items to remain readily available, their availability being restricted only by often ineffective measures to protect children from products that carry known risks, such as alcohol and tobacco. It has been clearly demonstrated—possibly even in the personal experience of some Members—that excessive consumption of alcohol can damage health; yet we still allow it to be freely available in shops, with no suggested dosage levels.
A doctor with whom I conducted a debate on the radio this morning ventured to express the view that sales of alcohol and tobacco should be banned. I suggested that such a programme might enjoy limited support among the electorate. We must make judgments about what is practical and also about what should be left to individual citizens to decide for themselves, on the basis of reasonable information that is available to them.
We also allow the sale of salt without warnings, although excessive consumption of it can do significant damage, and we do not try to restrict the size of packets available in supermarkets.
We need to consider the concept of risk. We all take risks, in almost everything that we do. We take risks when we eat and when we consume drugs prescribed by doctors. We take risks when we cross the road. Which of those risks is it our responsibility to judge, and in which cases should the Government try to help? One of the problems has been the failure to establish the philosophy on the basis of which we should make decisions. Should the Government decide what people ought to consume when they are feeling ill, or should individual citizens make judgments based on their own perception of their health needs?
We should measure relative risks. We should be clear about the kind and level of risk that we expect citizens to weigh up for themselves, the cases in which clear warnings are justified, and the cases in which society should expect Government intervention in the form of either restriction or a total ban. Because we have engaged in no proper analysis or debate, we act in an ad hoc and reactive fashion featuring glaring inconsistencies of approach.
The Government's response to the Select Committee report is directly relevant to today's debate. Let me quote some key passages. The Government
accepts the Select Committee's view that action on vitamin B6 should not be taken in isolation but in the context of the wider review of the safety of dietary supplements which is to be undertaken by the Expert Group on Vitamins and Minerals. The government recognises that the Expert Group will be considering the establishment of principles on which controls for ensuring the safety of vitamin and mineral supplements can be based.

Mr. John Hayes: I note what the hon. Gentleman has said about the expert group, although many in the health food industry are concerned about it. Will he, however, dissociate himself from the words of the Minister of State, Ministry of Agriculture, Fisheries and Food, who said that these were "drugs masquerading as foods"? Surely that compromises the work of the expert group before it has even begun.

Mr. Todd: My right hon. Friend the Minister for Public Health will have a chance to reveal the Government's position for herself. I will not be drawn into defending or otherwise a statement that I have not seen in context.
The response continued:
The government agrees that there is a delicate balance to be drawn in this and other areas between regulation to protect the public and the desire to determine such issues on the basis of personal choice.
It is for this reason that the government accepted the Select Committee's recommendation that action on vitamin B6 should be deferred pending the report of the Expert Group on Vitamins and Minerals.
Essentially, the Government said that we have to understand the philosophy of how we should intervene in the sector before we take an isolated decision on one particular product. They accepted the argument that I have set out.
There is scepticism among many consumers and those in the vitamins and minerals industry. Our discussion on B6 showed an unhappy relationship between that sector


and the "official" health sector. There is considerable suspicion that drug companies wish to undermine the position of those providing alternative products.

Mr. Desmond Swayne: Do not large drug companies have a motivation to use increased regulation and licensing requirements as an enemy of economy of scale that they can exploit to exclude smaller firms that feature largely in the market?

Mr. Todd: The hon. Gentleman may have a point. On a slightly different subject, but related to it, consumers in my constituency have complained to me about changes in the price regime for the purchase of simple analgesics following changes in dosage levels. There is a suspicion that some companies in the sector find ways in which to raise prices, based on Government intervention that has just happened.
In recognition of that scepticism, the Government made an extremely welcome and positive step, which was to allow direct representation by consumers and representatives of the industry on the expert group. After it considered the Government's response, the Select Committee applauded both those steps: the recognition of the need for a clear philosophy and for proper representation in the decision making that would lead to a regulatory framework.
One might therefore assume that any new proposals for intervention will be founded on that report, when it finally emerges, and there is probably still another year or so to go before it concludes its evidence. One would be wrong. The Medicines Control Agency is proposing to take additional powers in the sector after a brusque consultation that even another Government Department, the Department of Trade and Industry, has commented on:
We share your concerns that the consultation period was very short.… There are a number of pieces of legislation affecting these proposals in the 'borderline area' and we are concerned that the proposals from the MCA do not make any reference to these or require the MCA to consult with ourselves and other government departments with a responsibility for these areas.
That is scarcely a ringing endorsement of the consultation.
The MCA has proposed that it should have sole powers to decide whether any health product should be classified as a licensable medicine, requiring it to be tested for efficacy. Those tests carry massive costs for small companies. I think in particular of Surepharm, a small company in my constituency, which was built up from scratch by an individual entrepreneur, employs 30 or 40 people and specialises in the sector. It could not carry the regulatory cost that would be involved in securing clearance for particular products through the MCA.
That company had never imagined that it was manufacturing something that might be described as a medicine, yet someone could make that claim to the MCA and it could make that judgment. One recognises that most minerals, vitamins and herbal products could be described as either a food or medicine, and lie within that borderline classification. If the sole basis for classification is whether a product has a physiological impact, most foods and drinks would fall within the MCA's compass.

Mr. Richard Allan: I am grateful to the hon. Gentleman for raising the subject. On the key

subject of classification, my constituent, Mr. Ralph Pike of the National Association of Health Stores, has referred to the problem of the definition "medicinal by function" which appears in the consultation. Does he share my concern about its being a strange and subjective definition in deciding such important issues?

Mr. Todd: Indeed; I share exactly that concern. I have also been contacted by health food proprietors near my constituency; as my constituency is not blessed with one of those shops, people have to go to Derby to buy the products. They are concerned about precisely those points, so I recognise the point that the hon. Gentleman makes.
An individual would only have to complain and say, "Yes, I believe it is a medicine," for the MCA to be involved in the process. There is no review of any MCA judgment in which the industry or other consumers might be involved.
As the MCA is likely to be reactive to individual contacts, its involvement will be incoherent. A comment will be made about an individual product, the MCA will make a judgment on whether it is a medicine, and then apply the necessary regulatory framework to it if that be so. Essentially similar products may be treated differently. That is why the Government wisely referred the issue of B6 to the expert group to provide a coherent framework within which decisions might be made.
That takes us to the second possible reason for intervention. On the B6 study, did taking B6 actually help anyone? The evidence on that was inconclusive. I am not a scientist or a consumer of the products, so I have no way of making a personal judgment on the matter. One could go only by the number of people who claimed positive effects. There are many reasons why someone might claim a positive effect for consuming a particular product. We are all reasonably well aware of the fact that consumption of particular items may make people feel good, but may not have any medical or physiological impact at all, although they feel better for having taken it.

Mr. Peter Luff: The hon. Gentleman plays a distinguished part in the Select Committee on Agriculture. I thank him for his contribution. Does he recall that two members of the Select Committee claimed benefit from such products?

Mr. Todd: I thank the hon. Gentleman for his compliments. Indeed, one member of the Select Committee did a trial run on B6, taking it in measures that were in excess of those suggested by the Government. She then consulted her family and they all said that she seemed much the better for it. I personally think that she is very nice just as she is now, but that was just one individual's subjective judgment.

Dr. Jenny Tonge: I am horrified by that exchange. The medical profession would say that a double-blind, crossover trial must take place on any substance before we draw any conclusions. I would hate anyone to go away with the impression that one person feeling a bit better according to her family after taking something should be the basis for a judgment.

Mr. Todd: I take the hon. Lady's comment. In a way, it exposes exactly the point that I am making, which is


that many individual judgments are made on the matter. The scientific evidence is inconclusive. Select Committee members will bear me out: the information that we were able to obtain showed no clear judgment in favour of consumption of vitamin B6 for particular purposes.

Mr. Luff: Or against.

Mr. Todd: Or against. Therefore, people could simply make their own judgment. That is what hundreds of thousands of people did.
We heard no complaints. We were assured by the industry that it was careful not to attribute powers to the product that were not demonstrable. However, one cannot stop other people—in magazine articles, for example— suggesting the use of a product to deal with a particular problem. That often happens in the sector. People read a piece in a magazine that says that consuming a few more vitamins of a particular sort will do them a lot of good, and they go into a health shop and buy them. Perhaps the product does make them feel better—although we do not know whether they feel better because of the product. However, quite often, endorsement and marketing of products are effected by such informal means.
One cannot stop informal advertising. Moreover, we already have laws against misleading advertising. The MCA has also recently sought powers to control advertising claims for licensed medical products. There is an argument that such controls exist already. However, I am prepared to accept the view that there may be abuses that are best dealt with by the MCA. There is already such a proposal in an earlier MCA regulation that has not yet received parliamentary approval. However, that is not my specific concern today. The MCA would be applying the rules on advertising within the licensed sector, on products that have been licensed as a medicine—not the products that we are discussing today, unless the MCA chose to classify them as medicines through the process that I described earlier.
There is a third strand of regulatory activity, at European Union level. Since 1991, the European Commission has sought harmonisation of regulations for the sector. So far, the United Kingdom Government have rightly said that any regulation should be based on safety rather than need. Therefore, using the distinction that I drew earlier, the UK Government maintain that it should be a matter of whether a product is harmful, not whether it is demonstrably good for people. Although that is the correct view to take, it is not exactly the view that is taken in all other European countries—which is why the issue has been batted around for quite some time already.
The issue of efficacy should not be the determining factor in deciding EU regulation. However, the MCA's proposed involvement in the matter may make efficacy precisely the determining factor. Surely one should argue that there is inconsistency in the Government's approach to the matter. I believe that, provided manufacturers or marketers of the products make no medical claims for them, consumers should be left to make their own judgments.
The issue of dietary supplements evokes strong passion. Since becoming involved in it, I have discovered that people write extremely passionate letters on the benefits of the products that they have been consuming, and that, when they get on the telephone, they tell one about the products at considerable length.
One person told me: "Do not prevent us from taking responsibility for our own health." There is a broader philosophical issue—which we could debate at much greater length—on the balance between reliance on the medical profession to tell us about our health and reliance on individuals to make their own judgments on how they themselves should manage their own health. The person who told me that individuals should assume responsibility for their own health made an important and profound point. Individuals should own the issue of their own health—on which they, too, should make some judgments.
Furthermore, I do not think that it benefits the United Kingdom medical profession to regard itself as the sole arbiter of how health should be provided to individual citizens. Going down that route will lead only to overload and a complete lack of individual responsibility for what one consumes and how one lives one's life—all of which are much more critical factors in determining good health than whether one regularly visits the doctor.

Dr. Tonge: Does the hon. Gentleman agree that, recently, the Government have shown some inconsistency on those issues? We are not allowed, for example, to make judgments for ourselves on beef on the bone. We have absolutely no chance of making a judgment on genetically modified foods, as substances that have been genetically modified are already in the food chain. Does he agree that the Government have to get their act together and decide just where they will stand on the issues?

Mr. Todd: The hon. Lady is dragging a very large red herring right across a debate that could engage us for quite some time. However, I should briefly deal with the two points, which deserve a quick response.
On the beef on the bone ban, I should say—for the benefit of Conservative Members who do not know me so well—that I am not by instinct a regulator, but have always taken the view that individual citizens should make judgments for themselves. Therefore, I took some persuading that the Government's action on beef on the bone was the correct course to take. However, the main persuader in the issue was the overriding objective of lifting the beef ban. A critical factor in attaining that objective was the Government's stance on bovine spongiform encephalopathy and on the possibility of Creutzfeldt-Jakob disease among human beings.
The need to deal with the critical factor of credibility led me to believe that the beef on the bone ban was necessary, to ensure that our European partners—with whom we were, and still are, negotiating to lift the ban— were persuaded of the seriousness of our intent. That was the justification for the ban.
On genetically modified foods, I take the view that the Government are very seriously engaged in ensuring that consumers have, by means of proper labelling, proper information on what they are purchasing. We are operating on that issue within an EU framework, in which we must try to persuade others of the validity of our point of view. Fortunately, we have greater sympathy within the EU on that matter than we would if we were negotiating with the Americans, who take a much more cavalier approach to the subject.
Certainly within the EU, we have been forcefully defending the position of providing greater information, both in labelling products themselves and in stating on


labels the fact that GM-derived ingredients may be involved—or the fact that enzymes have been used that are not left in the food ultimately, but that nevertheless have a GM link. Currently, all those elements are subject to Government action.
I therefore believe that the Government are responding properly to the concerns mentioned by the hon. Member for Richmond Park.(Dr. Tonge).
I believe that consumers should be left to make their own judgments on dietary supplements. It simply should not be the Government's business to prevent someone from taking a product that is not known to be unsafe if they feel that it does them good. Let us establish a clear framework of how to regulate those products. If further regulation is needed, we should consult the public on their perceptions, and then act. Without such action, I believe that we shall risk taking incoherent action that is damaging to businesses and totally inexplicable to many consumers.

Mr. Philip Hammond: I congratulate the hon. Member for South Derbyshire (Mr. Todd) on securing this important debate and am grateful for the opportunity of stating the Opposition's view on the issue. I am grateful also to you, Madam Speaker, for allowing me to speak early in the debate. I apologise to the House and to the Minister for the fact that I shall have to leave before the debate ends, so that I may attend a Standing Committee. It is only one of the drawbacks of being somewhat short-handed on the Opposition Benches.
The British approach to dietary supplements, both by the current Government and the previous Government, has always been safety focused, concerned with the safety of consumers rather than with their dietary need. We strongly support that position. Although the direction in which the Medicines Control Agency is travelling has caused the industry some concern, the line taken in principle by the Government seems to be—as the Minister of State, Ministry of Agriculture, Fisheries and Food said, and as my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) quoted—that dietary supplements are "drugs masquerading as foods".
The British approach now has to be placed within the European context. Within the European Union, there is clearly a significant interventionist tendency focusing on dietary need—which often is expressed in terms of multiples of recommended daily allowances—rather than on safety. The European Union is therefore moving towards developing medicines standards in which not only safety and quality, but efficacy, have to be proved.
Safety must be the paramount consideration. Any substance, however it is classified, should be subject to removal from open sale if it is harmful. However, any such judgment must be based on sound science. We must have no repeat of the B6 fiasco. Therefore, the regulatory framework governing dietary supplements has to be the servant, not the master, and ensure that only safe products are on sale and that only justifiable claims for those products are made. It must not have the effect, however unwitting, of removing from sale products that are perfectly safe, that make no unjustifiable claims and that are widely used.
The great fear, which the hon. Member for South Derbyshire has expressed, is that extending medicines legislation to cover products that common sense tells us have little similarity with complex pharmaceutical compounds—the Medicines Control Agency has already publicly acknowledged that it is taking that action by embarking on action against products that are "medicinal in function", even if there is no concern about their safety—with all the associated costs of satisfying medicines standards, and introducing an efficacy hurdle, will effectively remove the products from sale by administrative action. Such a move would be a sledgehammer to crack a nut.
We must ask ourselves whether there is any evidence of serious safety risks from these products. Is any damage being done to consumers? Is the NHS suffering a burden of additional cost in treating ill effects caused by the products? Quite the opposite, I suggest, even if in some cases, as I think the hon. Member for South Derbyshire suggested, the benefits of taking them may be as much psychological as physiological.
I should like to suggest two possible ways of dealing with the problem. First, I question whether it is sensible to define everything as either a food or a medicine. Might it not be sensible to create a third category for supplements, with no requirement to prove the efficacy of the product—in other words, no requirement to prove need—but with a streamlined procedure for dealing with any science-based safety concerns? Secondly, if there is to be greater regulation of supplements, might we as a minimum consider introducing some grandfather rights so that products not hitherto subject to an efficacy test but on sale in substantial amounts throughout the country can continue to be sold unless they are demonstrated to be unsafe?

Dr. Peter Brand: Is the hon. Gentleman aware that many prescribed drugs are on the pharmaceutical register only through grandfather rights? Digitalis and aspirin never went through the rigorous tests that are now mandatory, and they probably would not have passed them.

Mr. Hammond: I take the hon. Gentleman's point. It is with that analogy in mind that I suggest that if the regulations are tightened it will be appropriate to protect the existing industry and consumers, where there is no suggestion of a safety hazard, by introducing a system of grandfather rights that would allow products to remain on sale.
The burden of proof in relation to an established product must lie with the accuser, in line with the long tradition of British justice. In any regulatory regime, the Medicines Control Agency cannot act as policeman, prosecutor, judge and jury in its own case. The consultation document MLX 249 takes a worrying step in that direction. That, as the Minister will be aware, seems to be part of a trend. Amendments to the Medicines (Advertising) Regulations 1994, which have also been laid and are due to be considered by a Committee of the House, appear to be headed in the same direction. They would extend the powers of the MCA and give it the right to act as judge and jury in its own case.
Other European Union countries operating under the same directive have managed to allow sales of supplements and herbal products either as foods or


medicines, with a simplified regime. Any licensing regime in the United Kingdom must be appropriate to the products involved. The objective must be the safety of the consumer, not a constraint on his, or perhaps in this case I should say her—it often is a woman—buying only what she needs as opposed to what she wants. If we adopted that test, we would ban half the goods on sale in the high street today.
The regulatory burden must be proportional to the risk, and so far I have seen little evidence of any risk. Action can be justified only to protect the public, not to conform to what, for most of us, is an alien concept of state intervention to allow us to do only that which is good for us, as opposed to preventing us from doing that which is positively harmful.
We need as light a touch to the regulatory regime as is consistent with the safety of consumers. I think that the Government recognise that principle. As always, within the limits of the paramountcy of public safety, we should support an established industry which has many valuable small firms within it that make an important contribution to the economy. Above all, any regulatory change must ensure continued access to existing products from a diverse range of suppliers in a competitive marketplace, unless there is clear and compelling scientific evidence that demonstrates that they are unsafe.
The expert group on the safety of vitamins and minerals established after the B6 fiasco has only just begun its deliberations. As the hon. Member for South Derbyshire said, it has probably another year or 18 months of work ahead of it. I urge the Government to allow the group to consider the wider issues, and to withdraw the proposed regulatory changes outlined in MLX 249 until that group has finished its work and reported its conclusions so that the Government may come to an informed decision.
In among all the talk of medicines, supplements and dosages, it is clear to me that what is most urgently needed in the debate on dietary supplements is a dose of common sense. I hope that the Minister will deliver that when she replies to the debate. I am only sorry that I shall not be able to hear that reply in person, but I shall read it with great interest in Hansard.

Dr. Brian Iddon: I congratulate my hon. Friend the Member for South Derbyshire (Mr. Todd) on his timely Adjournment debate. I have nothing to declare other than an interest in the topic that has been created by workers in a factory in my constituency who make health products and by hundreds of constituents who wrote to me during the B6 saga. I do not use health products myself, although I must confess to having been brought up during world war two on a lot of spoonfuls of cod liver oil and rosehip syrup. I made a lot of pocket money by collecting rosehips from hedgerows in the fields where I used to play as a young lad.
It is worth reminding the House that the B6 saga was a long struggle and I congratulate the Minister of Agriculture, Fisheries and Food on referring the subject to the group that has already been mentioned by other hon. Members. I had intended to go over the history of B6, but in view of the time, I shall go to the crux of the debate.
I pointed out during the Adjournment debate on vitamin B6 that, whereas medicines and foodstuffs are closely regulated, the group of products that we are discussing

this morning fall into a regulatory no man's land and attempts to use medicines law or foodstuffs law to regulate them will cause and have already caused problems.
MLX 249, which is partly causing the present controversy, is a proposed amendment to the Medicines for Human Use (Marketing Authorisations Etc.) Regulations 1994. It was issued recently by the Department of Health. A consultation letter was sent out on 6 November last year by the Medicines Control Agency and responses were requested by 31 December 1998. Note the very short time for consultation over one of the busiest holiday periods of the year. I shall come back to that in a moment. The proposal was to put the regulation in place by statutory instrument by 1 April. The MCA claims that it wants to make the decision-making process more transparent and put the classification process for medicinal products on a statutory basis.
MLX 249 relies for its existence on European directive 65/65, which was incorporated in UK law in 1995. That led to MAL 8, which is the MCA's interpretation—I underline that word—of the directive. Other countries have interpreted the same directive differently. Although the directive excludes foodstuffs, it has produced a broad definition of a medicine, which supersedes that given in the Medicines Act 1968, causing panic throughout the health food industry. The definition is:
Any substance or combination of substances which may be administered to human beings or animals with a view to making a medical diagnosis or to restoring, correcting or modifying"— 
I underline the next word—
physiological functions in human beings or animals is likewise considered to be a medicinal product
according to directive 65/65. Note the use of the word "physiological" instead of "pharmacological". The definition could classify water as a medicine, along with many other substances.
In a court action last year, the MCA used directive 65/65 and MAL 8 to remove melatonin from the shelves of health product stores and supermarkets. The industry is very worried that many other products will follow suit.
In a letter to me dated 2 February this year about MLX 249, my noble Friend Baroness Hayman, Under-Secretary of State at the Department of Health, said:
The proposed legislation has no bearing on herbal remedies exempt from licensing".
She goes on to say that
all the current exemptions from licensing for medicinal products will continue to apply.
However, at a meeting in Committee Room 18 on 19 February this year, John Neale, manager of the borderline unit at the MCA, took an apparently contradictory view when he said:
The proposals will improve the MCA's prospects of success in court
and
make it extremely difficult for a manufacturer to prove a product is not a medicine".
He also said:
We already have all the powers we need to do our job".
The health products industry regards such remarks as a threat to their business.
In response to a parliamentary question on 18 January this year, my right hon. Friend the Minister for Public Health admitted that at that time her Department had
received 69 letters from hon. and right hon. Members and 278 representations from other interested bodies and individuals. Three representations broadly support the proposals. The remainder are critical of the proposals to some degree."—[Official Report, 18 January 1999; Vol. 323, c. 380.]
In the time available for the debate, I am not able to refer in equal detail to the MCA's other proposed new regulations, MLX 239, on advertising, and SI 267, which was laid subject to negative resolution.

Miss Melanie Johnson: I have a registered interest with a pharmaceutical company in my constituency. I am concerned about the lack of a satisfactory appeal mechanism to an independent body under SI 267. Companies could be in the invidious position of committing a criminal offence, on the judgment of the MCA, without being able to appeal to a higher court. I should like my right hon. Friend the Minister to address that.

Dr. Iddon: I fully endorse that point, which I was going to make in my next few sentences.
If all the proposed regulations are accepted, the health food industry will be far more complicated to run. Many small firms will not be able to afford the costs involved. The MCA is a quango. As my hon. Friend the Member for Welwyn Hatfield (Miss Johnson) has just said, there is no right of appeal against its decisions. That is an important point that needs to be emphasised.
The 1997 Labour party manifesto made a commitment
to monitor the scale and quality of regulatory activity".
As a result, the deregulation unit in the Cabinet Office, established by the previous Administration, became the better regulations task force. One of its first jobs was to produce a very important document, which many hon. Members may not have seen, called "The Better Regulations Guide and Regulatory Impact Assessment", which was published in July last year.
On consultation, the document says on page 9:
Above all, allow enough time
It goes on:
Lack of time is one of the most frequent complaints about Government consultation. Eight weeks should generally be the minimum period.
On page 34, it says:
Always consider the option of 'do nothing' or 'do minimum' as it may not be possible for Government to improve matters, or the costs of doing so may outweigh the benefits".
I have written to Lord Haskins, chairman of the better regulation task force, suggesting that some Departments are not taking much notice of the good advice given in the Government's booklet.
Vitamins, minerals, dietary supplements and herbal products are clearly not foodstuffs or medicines, but as I have tried to show, two Departments—MAFF and the Department of Health—have tried to regulate them. We are in a regulatory mess. Indeed, that is why the debate is being held.
What should the Government do? Clearly, there is a need to do something. The two Departments that I have mentioned have rejected the "do nothing" and "do minimum" options. The Government could try to make the existing regulatory frameworks work, as they appear to be doing, but they are clearly having great difficulty. I agree with the hon. Member for Runnymede and Weybridge (Mr. Hammond) that a third way is needed. I suggested that at the recent annual Health Food Manufacturers Association conference in London. The Government should consider establishing a separate regulatory framework to cover the substances in question. The principles of safety, quality and efficacy, based on bibliographic evidence and traditional usage, should be the key drivers for the regulations, as they always have been.
There is nothing new about this idea. Canada and Australia have tried it already. Following a letter from the Canadian Health Minister, dated 13 November 1997, the Canadian House of Commons Standing Committee on Natural Health Products published a document entitled "Natural Health Products; A New Vision" in November last year. It contains 53 recommendations. Health Canada was recommended to set out an appropriate definition of natural health products in conjunction with a new separate natural health product expert advisory committee. The relevant food and drugs legislation would then be amended accordingly. There were also recommendations to create a new regulatory authority for such products, to build appeal mechanisms into the processes, to seek advice from those involved in the production of natural health products and, importantly, to promote research on their efficacy and safety.
We have reached the critical stage in Britain at which we need to review the existing regulatory procedures and seek a third way. We could refer the matter to the better regulation task force or, like the Canadians and Australians, we could set up a commission to look at the quagmire that we appear to be getting into. I look forward to the response of my right hon. Friend the Minister for Public Health.

Dr. Peter Brand: I congratulate the hon. Member for South Derbyshire (Mr. Todd) on allowing us all to appear so liberal this morning—even if only with a small "1". Citizens of this country can expect the Government to protect them in two ways: from being poisoned and from being ripped off. We are talking about substances which, in high concentrations, may well be poisonous, and substances for which claims are made that would make the average snake oil salesman blush. It may be that those claims are not made by the manufacturers, but they somehow find their way into advertising.
I am concerned that large sums of money are being spent by vulnerable people who are hoping to improve their lives. We must strike a balance, and I like the third way that seems to be breaking out all over the place—it is obviously catching.
The important issue is who decides what should be referred to the MCA. It is wrong that the agency has the power to trawl around to see what else might be within its remit. It is important that the shady line between what is a drug and what is food be addressed. I was disappointed that the draft Food Standards Agency


legislation does not address the issue of who determines what should be treated as a pharmaceutically active and dangerous drug, and what is a food. Physiological functionality includes everything that we breathe, do and take in.
I made myself extremely unpopular in my party by supporting the Government's line on B6—and then they caved in. B6 was an extremely good example; in itself, B6 can be a beneficial substance, but taken in high doses, it can be harmful. I thought that the compromise of allowing it to be freely on sale at a reasonable, rather than high, dose was a good safety measure—rather like selling aspirins only in packages of 30.

Dr. Iddon: At three times the cost.

Dr. Brand: That is not a debate for this morning.
The same issue can arise in terms of herbal remedies. As a GP, I am much more relaxed with people using herbal remedies. It is cheaper to use the natural product, and it is extremely difficult to take a pharmaceutically active substance in high enough doses to do oneself much harm. I am worried about the relentless drive to try to identify the active ingredient in whatever herbal tea we might be drinking, so that it can be concentrated and flogged off at a high price.
I am surprised that we have not had more support from hon. Members concerned about the debate on herbal cannabis and cannabinoids, as there is a similarity. It is dangerous to say that we need to identify every active ingredient in everything. That means we deny people a substance which may have some benefits—even if it is only as a placebo.
I urge the Government to set up a mechanism where we can identify what needs to be considered by the MCA. The FSA should have a responsibility in this area, and we need to work much more closely with the Advertising Standards Authority, which has a major responsibility in sorting out what is and is not a reasonable claim.
It is perfectly proper for any food or substance to be able to claim that it may be good for your health in general. "A Mars a day" helps whatever it is you want to do—that is a perfectly reasonable claim. It can be believed or not, and most people are not fooled. However, I would be extremely worried if it were claimed that a Mars could cure colitis, or stop cancer. There is a problem about claims being made for substances, as vulnerable people may be taken in. They may not help themselves by spending money that they do not have, and by taking substances in high doses—or to the exclusion of a more balanced diet—which may be harmful.
I urge the Minister to rethink. There is an opportunity to set up an agency with an overarching responsibility for food safety and nutrition. If we include the third category of substances, and align them more closely to food than to drugs—the link with drugs has already been established in terms of the FSA—we may find a way forward, provided we are prepared to be patient and to let the status quo carry on for the time being.

Mr. David Tredinnick: I congratulate the hon. Member for South Derbyshire (Mr. Todd) on obtaining this debate. He mentioned the B6 saga last year,

and history seems to be repeating itself. The MCA's proposals on borderline substances have all the hallmarks of the proposals for B6. The Minister's hair should be standing on end, because those proposals caused enormous problems for the Government. If this proposal goes through, it will be devastating for consumers, manufacturers, and practitioners of herbal remedies and vitamins.
If Uncle Joe Stalin had been going through his red box in the Kremlin and this proposal had come up, he would have said, "I like it very much. It is good. It is disempowering the people. It is giving one of my Government agencies the opportunity to be judge, jury and de facto executioner." Does that really fit in with the Government's philosophy? It is bad luck for the Government that they have chosen 1 April to implement the measure—April fool's day. It is hardly a good omen.
The pressure on the Minister resulted in the extension of the consultation period, which was widely welcomed. However, as the hon. Member for Bolton, South-East (Dr. Iddon) said, that consultation period included Christmas; it was woefully short and quite inadequate.
When the MCA circulated proposals for the revision of the so-called 1994 regulations on medicines for human use last November, a flood of correspondence came into the offices of Members of Parliament—not least mine, as I am the treasurer of the parliamentary group for alternative and complementary medicine, a position that I have been proud to hold for three Parliaments. I have been doing the job for 10 years, and I regard it as valuable.

Dr. Brand: The hon. Gentleman is looking very fit on it.

Mr. Tredinnick: I thank the hon. Gentleman; perhaps it is because I take a few supplements. Many complementary and alternative practitioners in this country are scared out of their wits by the proposal. An experienced traditional Chinese medical practitioner—a qualified UK physiotherapist and acupuncturist—said to me, emotionally, last week that the proposal, if it goes through, will make her a criminal. The hon. Member for Richmond Park (Dr. Tonge) may look askance, but the facts do bear that out.
The document would give the MCA new legal powers to allow it to decide, unilaterally and virtually without reference to anyone other than its own officials, whether a so-called borderline substance—one of the vitamins or supplements—was a medicine or not. The decision would be binding in any criminal or civil proceedings, unless shown to have been made unreasonably. Do the Government really believe that that is fair?
On 19 January, the parliamentary group of which I am treasurer met John Kneale, the manager of the policy and borderline unit at the MCA. I pay tribute to him for coming along—he did not have to. We were grateful to him for speaking to representatives from the industry and colleagues. He said:
I do not believe that the MCA would be able to review products that have been on the market for a long time.
He tried to reassure us that the MCA was not taking powers that it did not already have, but he went on to say:
The manufacturer would have to seek to show through the court that the MCA's decision was unreasonable. It improves the MCA's possibility of success in court.


The burden of proof is transferred from the accuser to the accused, which gives the MCA too much power and will result in the criminalisation of a practitioner through an MCA decision made without the necessary element of natural justice required to safeguard basic constitutional rights. Power is transferred to a prosecuting authority to adjudicate without accountability. Such a power exists nowhere in any other democratic society and if granted will unquestionably be open to abuse.
The current UK legal system operates to protect the innocent as well as to convict the guilty, placing the burden of proof on the state. That one simple aspect of British justice helps to prevent a large number of miscarriages of justice. If the proposal goes through, there will be widespread injustice, because arbitrary decisions will be taken, they will be disputed by those affected and there will be little recourse.
How does that sit with new Labour's so-called philosophy of open and accountable government? I suspect that the Government were hoping to slip the proposals through. They certainly were not checked by their spin doctors. Someone slipped up, however. If the proposals go through, it will be highly damaging for the Government's image and credibility in both the short and the long run. My hon. Friend the Member for Southend, West (Mr. Amess) may castigate me for trying to tip off the Government about these problems and may say that we should let them ride it out.
Why is all this happening? The whole exercise is being carried out not to protect or benefit consumers, health manufacturers and practitioners, but to make life easier for officials in the UK and to appease the bureaucrats in Brussels. At the meeting of the all-party group on alternative and complementary medicine, the borderline unit manager said:
We are bound by European legislation.
However, we have exemptions, as in many other matters. We are fighting to maintain those exemptions, while the European Community as a whole is revising its position.
There is every indication that there will soon be new legislation on herbal products from the European Commission, as it tries to homogenise the law in Europe. The great concern is that the UK Government will try to pre-empt what is happening in Europe and introduce a draconian measure at a time when the whole process is being thought through at a more leisurely pace on the continent.
Herbal remedies are traditional medicines whose therapeutic use has been tried and tested over hundreds, or even thousands, of years. Such plant medicines invariably comprise many chemical components whose overall effect cannot simply be assumed by reference to perceived active constituents. Apparently unimportant fractions of a plant may act in vivo to buffer or amplify its principal pharmaceutical characteristics.
The essential features of herbal medicine have important implications for their assessment and licensing, but current European Union medicines licensing procedures are generally designed to evaluate and validate single chemical entities—not several chemical entities— as medicinal products.

Dr. Howard Stoate: I am rather concerned by the assertion that a medicine must be safe simply

because it has been around for hundreds or thousands of years. All medicines require the rigour of full medical examination.

Mr. Tredinnick: The hon. Gentleman may have the opportunity to make his own speech later on. Most medicines used by traditional Chinese medical practitioners have been used for a very long time.
Plant medicines cannot be patented, so the enormous sums required to bring a new product to the market cannot be recouped. The cost of licensing compound herbal medicines would be so high as to be unrealistic for all but the largest companies. The smaller companies referred to by the hon. Member for South Derbyshire and others would be put out of business.
It seems entirely wrong—this is borne out by all the letters that we have received—to classify pharmaceutical drugs in the same category as herbal medicines derived from natural sources, including many foods, such as cardamom, cinnamon, garlic, ginger, Chinese dates, peach kernels, orange skins, borage, celery, parsley, rhubarb and all spices.
At a presentation to the all-party group by the Association of European Self-Medication Industry, known as AESGP, we were told that the European Commission was considering issues concerning the internal market and herbal medicine. The association stressed that there is a wide divergence of opinion in the European Union but that strenuous efforts are being made to develop a sensible pan-European policy.
The Minister would be well advised to wait and see. Products not classified as medicinal products belong in most cases to the food and cosmetics category, even though they sometimes contain plants with pharmacological properties. In Ireland, Spain and the UK there exist preparations defined as medicinal products that are exempt, under specific conditions, from licensing requirements. We have to protect that position in the short term.
It will be the role of the European Commission to evaluate and assess the consequences of possible divergence in the legal position and/or the assessment of herbal medicinal products, and to agree a plan on how best to safeguard public health while allowing the free movement of herbal medicinal products throughout the European Union.
At a time when every country in the European Union has its own specific problems, it is not appropriate for the Government to take the arbitrary action that they propose. The issue is under debate and we do not need these draconian measures.
I offer the Minister the hand of friendship in finding a way out of this maze. There are three possible solutions. She could back off and leave everything as it is, which would satisfy most people, because nobody really wants the change. The second honourable way out would be to wait and see what happens in Europe; so much is going on that it seems foolish to pre-empt it. What is the third option? Several hon. Members have mentioned the third way. Having been a great fan of Mrs. Thatcher, I have not always been keen on the third way, but in this instance it is probably the right way forward.
The all-party group has consulted widely among our large membership to ascertain whether that idea should be pursued. In the United States, the Dietary Supplement


Health and Education Act 1994 defines dietary supplements as a special category between foods and medicines. They are defined as products that are
safe within a broad range of intake",
and for which
safety problems within the supplements are relatively rare.
Such supplements include all the medicines that we have been discussing.
The way forward is not to allow the proposals through at this time. The Minister must back off or, perhaps better still, wait for Europe or consider the third way.
The Government should not rush into any legislation that would harm the future of herbal medicines, food supplements and vitamins. The B6 fiasco last year, followed by the present proposals, have raised great fears in the industry. That fiasco should have served as a warning to the Government that all European countries treat such products differently. This is not the time to classify celery and beetroot as drugs, or to break well-established principles of English law. The Government should agree to consider a third, new category between foods and pharmaceutical drugs, thereby getting themselves off the hook and making consumers and producers happy.

Mr. David Amess: I congratulate the hon. Member for South Derbyshire (Mr. Todd) on the way in which he introduced the debate. He has certainly given the House an opportunity to explore all the various issues. He was right to represent the producers of the products in question in his constituency. If I had such producers in my constituency, I would have done the same. Sadly, I do not, but I have many constituents who use the products and a number of health food shops that supply them.
I pay tribute to Consumers for Health Choice, which has done a splendid job in educating Members of Parliament such as me on the various issues. Until the row about vitamin B6 last year, I knew precious little about the issues. I may regret what I am about to say, but I am not a natural pill taker. I would try anything to cure hay fever and have done so over the years. I was told that I would grow out of it, but I am taking a long time to do so.
I have been overwhelmed with letters and petitions on the matter from my constituents. Given that, in terms of the number of senior citizens who live there, Southend, West is 33rd out of the 659 constituencies, I can only conclude that those people are doing extremely well on those products so far.
Before the Minister responds, I simply want to draw attention to three pieces of information that I have received from constituents. One lady wrote that she used these products
daily to try and stay healthy so as not to burden the state … I understand the Government is now trying to sweep vitamin products off health food shop shelves, by trying to licence them as medicines.
That lady wants the Government to tell her
why these proposals are being rushed through with such urgency (1st April 1999)".
She points out:
The only people that would benefit at the end of the day would be the pharmaceutical companies",

who, according to her, apparently already make "vast profits."
Another lady mentions the fact that 1 April is April fool's day and says:
it is no joke for the many independently minded people who wish to take responsibility for their own health and avoid as long as possible being without any free choice of health therapy.
She asks me to
protest against this underhand plan to tack on the power to restrict … liberty by avoiding free debate on this vital issue.
She continues:
We want nutrition to be our first line of health defence and we want freedom of choice in medicine.
Finally, one supplier of such products in my constituency believes that the Medicines Control Agency wants
to include far more than is necessary under their control umbrella and once they have gained the changes in the law will become judge, jury and executioner in the removal of anything they see fit from our shelves without consultation.
The letter continues that, as regards health food shops,
there is in place effective control on products under the Medicines Act that has worked well for years. Freedom of choice is again in jeopardy".
I entirely agree with my hon. Friends the Members for Bosworth (Mr. Tredinnick) and for South Holland and The Deepings (Mr. Hayes). I do not want to cause trouble between the Department of Health and the Ministry of Agriculture, Fisheries and Food. However, it was unfortunate that the Minister responsible for food suggested, when he gave evidence, that these products were somehow masquerading as food or were foods masquerading as drugs.
If the hon. Member for South Derbyshire achieves anything today, I hope that it will be to persuade the Minister for Public Health to adjudicate on the difference between the two Departments and to put the fears of all our constituents at rest.

The Minister for Public Health (Ms Tessa Jowell): I shall begin not exactly by registering an interest, but by pointing out that my brother is a senior executive in Glaxo Wellcome. For that reason, I do not take part in departmental discussions or decisions about pharmaceutical licensing. I am responsible for complementary medicine, but I want the House to be aware of that fact in the context of my responding to this debate on a matter that would normally be handled by my noble Friend Baroness Hayman.
I congratulate my hon. Friend the Member for South Derbyshire (Mr. Todd) on taking this opportunity to raise a matter that is of great cross-party concern. I hope that, in the time available, I can generate a little more light than heat and put the record straight on a number of important issues for those hon. Members here today and for the many people who are enormously concerned about the issue.
First, let us deal with the facts of the current controversy. I am concerned that much of the criticism of the proposals has been an unwarranted cause of worry and worse for manufacturers, retailers and consumers alike. I say that as someone who has ministerial responsibility for complementary medicines and who recognises the


enormous public interest in this new and developing area of medicine, which is of potential benefit. We should be clearer and more systematic about the evidence for the benefits that many people anecdotally report. I approach this debate by making clear my sympathy for complementary medicine in general and my understanding of many people's enthusiasm for and reliance on methods of complementary medicine.
As has been clear throughout the debate, the problem is the lack of a legal definition of the term "dietary supplement". Many of the products described as such inhabit an increasingly grey area between foods and medicines. As the law stands, those products for which claims are made for the treatment or prevention of disease, or which are administered to restore, correct or modify physiological functions, fall within the definition of a medicine and are subject to the requirements of the Medicines Act 1968 and the appropriate European directive. Such products normally require a marketing authorisation—that is, a licence—before they can be sold or supplied.
Products that are licensed as medicines are excluded from the definition of food in the Food Safety Act 1990. Products that are not licensed are automatically regarded as foods and are subject to the general provisions of the 1990 Act, which effectively requires that they should not cause harm, and to the Food Labelling Regulations 1996, which control the labelling and advertising of food. Among other things, the regulations prohibit claims in labelling or advertising that a food has the property of preventing, treating or curing a human disease, and lay down conditions for the use of nutritional claims and certain descriptions that may mislead.
As regards policy, the Government have stated on a number of occasions that we believe that the quantity of vitamins and minerals in supplements sold under food law should be limited only in cases in which it is necessary to protect the public. Any limits should be based on safety considerations, judgments about which are made on the basis of expert scientific advice.
I would not pretend for one moment that such advice might never give rise to controversy, but the boundary between categories of product can be difficult to determine. Garlic, evening primrose oil and vitamins in general may be dietary supplements or medicinal products. The determining factor is whether they are sold with claims to treat or prevent disease. If they are, and if the manufacturer wishes to continue to make those claims, he must apply to the MCA for a licence for the product.
It may be helpful to remind the House of the responsibilities of the MCA. The agency has a duty, on behalf of the licensing authority, to implement and enforce the provisions of the Medicines Act 1968 and other medicines legislation. It does so to protect public health, and specifically to make sure that the medicines that sick people use are safe, of high quality and effective. The MCA has a very important role in protecting consumers.
Part of the MCA's duties involve deciding whether a product is or is not a medicine. The criteria against which it makes those decisions is a matter of European Union law.

Dr. Brand: Does the Minister think it appropriate for the MCA to be both the prosecution and the jury in

these matters? Should not the MCA take up only matters referred to it rather than deciding for itself what its remit should cover?

Ms Jowell: I do not accept that point. The routes by which matters of concern are raised with the MCA are many and varied. Many of the grounds on which inquiries are raised about products that are in a grey area are identified by public concern or by general practitioners, such as the hon. Gentleman himself, on behalf of their patients.
Unless EU law changes, there will be no change in the status of products sold as food or as herbal remedies exempt from licensing. Those products will continue on open sale without the need for licensing. It is claimed that if the consultation proposals became law, the MCA would sweep supplements and herbal remedies from the shelves unless they were licensed. Those claims are completely unfounded.
What would the proposals do? They would make the process by which medicines are classified more transparent, consistent and credible among the wider public. That is important because the present purely administrative arrangements for classifying medicines are sometimes criticised by manufacturers on the ground that they have not had a full and fair hearing. It is the Government's view that decision-making processes should be as open as possible. We believe that introducing a new statutory process, on top of the agency's present administrative arrangements, will make for greater clarity and transparency.
The Government also believe that if manufacturers are given greater access to the classification process, they will be able to have faith in decisions under it, and it is important that they should have that faith. We believe that introducing a statutory right for manufacturers to participate in the process and put their arguments and cases to a review panel would effectively address the criticisms sometimes made about the alleged secrecy of the present classification arrangements.
At the same time, the proposals would improve the effectiveness of the MCA's compliance and enforcement processes by reducing the scope for delay and evasion. In that way, we would demonstrate the UK's commitment to full implementation and enforcement of medicines legislation. We believe that introducing a new offence of non-compliance with a final decision will bring greater precision to compliance and enforcement activity. The proposed presumption in favour of the MCA in any subsequent proceedings should also strengthen the effectiveness of enforcement activity.
Let me say something about what the proposals do not do. They do not give the MCA a new and unaccountable power to decide whether or not a product is a medicine. The MCA already has that power, as the Court of Appeal confirmed last year. The MCA exercises its powers in accordance with EU and UK law, legal precedent and its published guidance. The MCA also has the power, on behalf of Ministers, to seek to enforce its decisions in the courts.
I want to deal with some specific criticisms levelled at the proposals. It is suggested that the consultation exercise is too short and secret. In fact, the initial eight-week timetable was within the MCA's normal six to eight-week limit. We have extended the consultation period for an


additional month, and implementation of the proposals is not tied to a target date of 1 April. We have already said that we are prepared to listen further, and so we should.
A second criticism is that the statutory review procedure would not be independent of the MCA. We propose that the members of the review body should be officers of the MCA. As the Court of Appeal has recognised, the MCA is a specialist body with accumulated experience in relation to medicinal products, which has had to develop a consistent policy for similar products. Under EU law, it is the licensing authority's duty as the competent authority to make final decisions on classification.
The third criticism is that the proposal to introduce a new offence of non-compliance with a final MCA decision is unnecessary. In any subsequent legal proceedings, the MCA's decision would be deemed correct, unless the manufacturer could show that it was unreasonable. The proposals are said effectively to prevent a manufacturer having any chance of a successful defence in court, but that is not the case. The European Court of Justice has recently agreed that the courts should not have to reassess the merits, as distinct from the legality and reasonableness, of the MCA's final decisions. Accordingly, we do not accept that it should be necessary for the courts to reassess the merits of MCA decisions.
If the MCA were to take proceedings because a manufacturer would not comply with a final decision, our proposed change would shift the burden of proof to the manufacturer, who would have to prove that the decision was unreasonable. We believe that that is justified. The decision would have been arrived at only after thorough and open assessment and review. Manufacturers will have repeated opportunities to make their case.
Perhaps the most alarming claim has been that dietary supplements will have to be licensed from 1 April as prescription-only medicines. That is emphatically untrue. The proposals will not affect the status of dietary supplements, and the idea that they would be available only on a doctor's prescription is equally unfounded.
We will consider carefully the criticism that the shift in the burden of proof in proceedings is oppressive and lacking in natural justice. We recognise that manufacturers would find it extremely difficult to prove a final decision by the MCA to be unreasonable. We are sensitive to the need to show that justice is done. Consequently, we will look particularly carefully at this part of the proposals, to ensure that they go no further than our obligations as the licensing authority require.
In conclusion, we want the people of the United Kingdom to have confidence—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. We now come to the debate in the name of the hon. Member for Totnes (Mr. Steen).

Government Housing Projections

11 am

Mr. Anthony Steen: I am grateful for the opportunity to raise a matter that is of great importance, especially to my hon. Friends, although there do not appear to be many Labour Members present. I can see the odd Liberal.

Mr. John Burnett: Will the hon. Gentleman give way?

Mr. Steen: I have not yet started and there is no way that I will give way to the hon. Gentleman now. If he sits still for half an hour, I shall give way to him.
Last December, I was fortunate enough to obtain a half-hour Adjournment debate on the housing projections and the 4.4 million new units that will have to be built by 2011. The Minister explained that the whole thrust of the previous Government's policy of predict and provide was to be replaced by a new and radical planning model, based on the principle of plan and manage—the new buzz words. I have been fortunate enough to obtain an hour and a half debate some three months later and the same Minister is here to reply on behalf of the Government.
I do not know why the Government wheel in their Jeremiahs on such occasions. On 9 December, instead of making an optimistic and constructive contribution, the Minister said that it was all too late, and that new Labour's new solutions would not come into play until the 4.4 million homes in the 1991 housing projections had been built. That is probably why he has been wheeled in by the Government. His sole role is to say, "Too bad. All those houses will have to be built. We will build them in the towns and in the villages. We will build them all over the countryside, wherever we can squeeze them in." That is probably why the Minister is before us today, and he will probably say the same thing again. I hope not.
The Government have been assisted by the Liberal Democrats on Devon county council who have just approved the Devon county structure plan, which gives the go-ahead for the building of 70,000 new housing units for the county between 1995 and 2011. If that plan is carried out, 90,000 new housing units in total will have to be built in one of the most beautiful counties in Britain. That will increase the population from 1 million to nearly 1.25 million, or by some 20 per cent. On 15 December, the Herald Express, the local newspaper in Torbay, claimed that the number of people living in Torbay is set to rise to 133,600 by 2021, an increase of more than 10,000. I am pleased to see that my hon. Friend the Member for Teignbridge (Mr. Nicholls) is in his place, as one would expect, because the paper also pointed out that the population of Teignbridge is expected to expand from 116,700 in 1996 to 135,000 in 2021, an increase of 15.6 per cent. South Hams, a large chunk of which is in my constituency, faces a 17.2 per cent. increase, rising from 79,300 to 93,000. It is not surprising that the population of Devon will increase to 1.25 million. We are talking not about redistribution of the existing population but about a net increase.
Formal approval of the county structure plan and the Secretary of State's confirmation of the figures means that it will be difficult to change them. However, it is not too late to decide where the houses will go and at what speed


they will be built. That is why the Government's plan and manage policy is critical. If it were applied, it would ensure that priority was given to building on brown-field sites. As things stand, there is little planning policy guidance and no attempt to ensure that developers are directed to build first in urban areas.

Mr. Patrick Nicholls: The logic of my hon. Friend's point is that, if the Government are content to say that the previous basis for planning was wrong and that plan and manage is the way forward, they cannot refuse to impose their policy change on the present figures. The Government can take one position or the other, but the current situation is untenable.

Mr. Steen: I hope that the Minister heard that point, because he was engaged in a conversation. If he does not answer that point when he winds up, I hope that my hon. Friend will remind him of it.
As matters stand, the 4.4 million homes will be built under the housing projection. The structure plans have been completed in Devon, and the district councils now have to formulate local plans for the placement of those houses, paying regard to environmental sustainability— again, the new buzz words. I am glad that a few Liberal Democrats are present, because those are their buzz words, albeit they mean as little in reality as new Labour's buzz words, plan and manage.
The Government have a 60 per cent. brown-field recycling target. We accept that figure, although we would increase it slightly. My right hon. Friend the Leader of the Opposition has said that if we were in office, the figure would be nearer 65 per cent.

Mr. Graham Brady: Would my hon. Friend care to comment on the fact that the term "brown-field" can mean different things to different people? As the Minister is well aware, the Labour council in the borough of Trafford is seeking to build houses on playing fields, which count as brown-field sites for the Government's purposes.

Mr. Steen: That is news to me, and I hope that it is news to the Minister. I hope that he will ensure that the council does not build houses on playing fields, but I fear that he will squeeze them wherever he can fit them in, including on playing fields. I hope that he will deny that and issue a PPG note on the issue. I am prepared to give way to him now if he would like to deal with that point.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford): Following the convention of our Wednesday morning debates, I suggest that the hon. Gentleman focuses intelligently on the issues, instead of bandying abuse across the Chamber, which does not ensure a sensible debate on serious issues about how genuine housing need is met in a way that is sustainable and does not damage the countryside.

Mr. Steen: I would not have given way if I had known what the Minister was going to say. It was very unhelpful. I wanted him to deal with playing fields, but he clearly does not wish to do so yet.
The Government's 60 per cent. brown-field target is an admission of the fact that building in the countryside cannot continue at the rate that it has in the past. The aim is to recycle vacant, derelict, dormant, unused and brown-field land in our cities. That is nothing new, however: it was the aim from the 1970s onwards. In the 1980s, the Conservative Government set up a register of dormant, derelict, vacant, unused and under-utilised public land. I was much involved with that register and with what should be done with the 200,000 acres of unused vacant land that was then in public ownership.
In my excellent book "Plums", which I know many of my colleagues have read, I suggested that public vacant land should be auctioned off, with a covenant to ensure that it would be developed within five years. I proposed private regional development corporations, listed on the stock market and with the task of developing vacant land and public ownership profitably. The Minister for Housing and Planning at the time, my hon. Friend the Member for West Worcestershire (Sir M. Spicer), was on the point of acting to implement my proposals when, unfortunately, he was promoted. The privatisation of rail, water, gas and electricity all followed, and that switched much of the vacant land from public to private hands. Public vacant land became private vacant land and, as a result, the number of acres of public vacant land has dropped dramatically. However, the utilities still own much private vacant land that could be developed.
The brown-field recycling target is nothing new, only a variation on an established Conservative theme. The Western Morning News reported on 20 February 1999 that 58,000 of the new housing units planned for the west country could easily be built on brown-field sites in the west country. As a result, the figure for green-field building could be reduced and the figure for Devon could be reduced pro rata.

Mrs. Angela Browning: I apologise to my hon. Friend for missing the first few minutes of his speech.
The point from the Western Morning News about the availability of brown-field sites was taken from a report that has only recently been published by the south-west regional planning conference—the body that made the recommendation about the county structure plan numbers to Devon county council in the first place. Does my hon. Friend agree that, valuable as the report is, it would have been much more helpful if we had had such a report two and a half years ago when we began work on the country structure plan, rather than receiving it at the tail-end of the process, after the Prime Minister had issued a diktat to East Devon district council that it must now get on and plan those houses?

Mr. Steen: As always, my hon. Friend makes a telling and important point. One cannot deal with housing allocation if one does not have the information necessary to put houses in sensible, wise and productive places. I hope that the Minister will take that point seriously because it is a grave and important one that will add to this debate.
I have mentioned the problem of brown-field sites. Another problem stems from the failure to provide an arrangement by which local authorities can trade housing allocations. Districts cannot swap with districts, nor can


counties with counties or regions with regions. North Devon might want to trade with the Torbay area—after all, both their councils are Liberal Democrat run—with the result that the houses planned for a highly congested and overbuilt area could be moved to one where there is more space.
The Minister is bound to say that that is not his fault, because those figures originated from the Office for National Statistics in the late 1980s and the then Secretary of State for the Environment, my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), handed them down to the regions. At this stage, I shall not argue with the Minister about the figures—we have already gone around that course—although, as I have said, I think that they are suspect and are based on the predict-and-provide philosophy. They are treated as though they are divine guidance. My criticism is of the way in which the figures are handed down vertically: Government, regions, county, district, parish. There is no lateral integration and no way in which local authorities can deal with each other and trade in housing figures.
The ONS figures are merely a repetition of past trends. Past performance is not a guide for future demographic trends. The current structure plan is formulated on the basis of what has happened in the past. Can that make sense for the future? Surely, such calculations must be unreliable. For example, in the 1980s we believed that the economy would continue to grow and that that trend would never stop. Banks lent more and more money so that people could buy land and houses, and prices went up. However, it all went terribly wrong and many people burned their fingers; millions ended up with negative equity and debts.
The housing forecasts are based on exactly the same flawed assumption: that whatever happened in the past is bound to repeat itself in the future. Predict and provide— the basis for those housing forecasts—has become a self-fulfilling prophecy, and I pointed that out to the Minister last December. The buzz phrase is no longer predict and provide, but plan and manage. At the moment, it is merely a buzz phrase; the predict and provide approach continues to hold sway in planning credence. What is the point of changing the whole basis for housing number predictions, if there will be no effect until the date of the next structure plan? The Minister protests that the Government are doing something, but what is it please?
The figure of 4.4 million new homes for the United Kingdom—and 438,000 new homes for the south-west and 90,000 in Devon—should not be considered as a target that must be reached, but that is how planners and local politicians continue to regard it. The truth is that those figures are not targets, but merely projections—an informed guess or an estimate of what might be needed. The use of those housing figures as targets is the reason why councils and developers struggle to build houses, so that the targets are fulfilled at any cost.
It is just like the building of the M25; that, too, became a self-fulfilling prophecy. We thought that building a huge road around London would put a stop to gridlock and end traffic problems, but more and more cars used the road and the traffic jams are legendary. It is the same with house building; the more houses are built in an area, the more people come from outside to live in them and the more the demand increases.
Does the Minister agree that the figure of 4.4 million is not a target, but a projection; and that such projections forecast the maximum number of housing units that can be built if all the conditions are right? Why was there nothing in yesterday's Budget to give incentives for developers to build in towns and disincentives to them to build in rural areas? Furthermore, if that was a recognised aim of the Government, planning appeal inspectors could refuse permission to build on green-field sites by arguing at the appeal stage that there were plenty of brown-field sites left for development in neighbouring towns and cities. That would discourage developers from using the appeal process as a form of blackmail against councils that are afraid of spending council tax payers' money to defend such appeals.
Under the present system, councils and Government alike are obliged to allow developers to build wherever they want within the local plan area. In addition, councils feel pressurised by a time scale that forces them to allow building by a certain date; they are obliged by law to find sufficient land to designate for house building to fulfil the housing targets that have been handed down to them. The local plan highlights where those houses are to be built, but contains nothing to prioritise the use of brown-field sites in urban areas. That is because different local authorities deal with urban and rural areas and they are not able to liaise over the housing figures.
Councils should strengthen the incentives for brown-field site building by telling developers, "Until you find the building of sufficient infrastructure to serve this new development and to provide good quality of life for the residents, there is no way that we shall give you planning permission". If that were the case, South Hams—an area whose natural environmental beauty has been recognised by no less an authority than the House of Commons Library and which has been described as one of the most beautiful places in England and Wales—could say no to developers. Furthermore, the local council would be assured that its decision would be upheld by planning inspectors on appeal. That would force developers to look at towns for building purposes—the Plymouths, Torbays, Exeters and Bristols.

Mr. Adrian Sanders: I congratulate the hon. Gentleman on securing this debate. He says that houses should be built not in South Hams, but in Torbay, of which he represents a quarter; and no doubt he does not want those 3,000 to 6,000 extra houses to be built in Brixham, Galmpton or Broadsands. The hon. Gentleman is being honest, so he is saying that those houses should be built in areas such as Occombe valley, Cockington or Preston Down road. The hon. Gentleman nods his head; I am grateful to him for that confirmation.

Mr. Steen: If I was nodding, it was because I was getting bored with the hon. Gentleman's remarks.
The "not in my backyard" principle is a good planning principle because it expresses self-interest and there is nothing like self-interest to ensure that the right decision


is reached. Clearly, the right decision is that it is better for those new homes to be in the hon. Gentleman's constituency than in mine.

Mr. Paul Tyler: Will the hon. Gentleman give way?

Mr. Steen: I shall give way when I have dealt with the points made by the hon. Member for Torbay (Mr. Sanders).
There are many badly designed homes and buildings in Torbay, as the hon. Gentleman will agree. Torbay has grown like Topsy. If there was better planning and better design, the space could be used more productively.

Mr. Tyler: I am sorry that the hon. Gentleman has abandoned his main thesis, which concerned the inadequacy of the predict-and-provide approach. We all now realise that the previous Government's failure to move away from that principle is why we are in the current position. Will the hon. Gentleman turn westward and consider the circumstances of his hon. Friend the Member for South-West Devon (Mr. Streeter), who is determined to have an even larger development on green-field sites than is currently proposed? What does the hon. Member for Totnes (Mr. Steen) say to his neighbour?

Mr. Steen: The hon. Gentleman raises a perfectly acceptable point. I must not be drawn too far from the thesis of predict and provide, as he was clearly following it with interest. I hope that the Minister will withdraw his unnecessarily unkind remarks about my not getting involved in a serious discussion. I see the Minister smiling. I am sure that he was overcome momentarily and is now back to his normal, happy self.
It is not for me to answer the hon. Gentleman's question. My hon. Friend the Member for South-West Devon (Mr. Streeter) is well known for his oratory, clarity and good sense. I am sure that, when the time comes, he will be able to respond to that point.

Mr. Gary Streeter: The time has come. Does my hon. Friend agree that the real glory of Devon is to be found not just in Dartmoor, in the rolling hills of South Hams—which he and I are privileged to represent—or in our coastline, but in our beautiful, picturesque villages? We do not want a new town or to see existing villages overwhelmed by new building. We must protect and preserve our existing villages in south Devon at all costs.

Mr. Steen: That is the right answer. The only snag is that, in the 1960s and 1970s, the planners and the county council in Devon said, "We want to protect villages and hamlets, but we realise that we can do that only by ruining one area completely by building a new town". I used to represent that new town of Ivybridge, which is now in my hon. Friend's constituency. It was a tiny hamlet of 1,500 inhabitants but now has 12,000 or 13,000 inhabitants. If that was the only place ruined, one could accept it. However, the planners not only ruined Ivybridge but have continued to build in all the villages and hamlets that they

said they would not touch because they were building a new town in Ivybridge. Will the Minister address that important issue? If a new town is built outside Plymouth—large or small—will the hon. Gentleman put an embargo or guillotine on any further attempts by planners and local politicians to build in the villages or hamlets? That is the real problem.
I do not want to be drawn too far away from the point that I was pursuing. We must find a way of forcing developers to consider building in towns. I mentioned Plymouth, Torbay, Exeter and Bristol before the hon. Member for Torbay jumped up. Unlike their American counterparts, our cities are grey, often unfriendly and not fun places because they empty at the end of the working day when everyone rushes home to the suburbs. British cities are like doughnuts: they have empty centres where the jam used to be. Jam is made by combining a mix of ingredients: by including all ages, lifestyles, earning levels, types of marital status and so on. Our cities need to be vigorous, vital and exciting places in which to live and work.
That will not happen if developers continue to build on green-field rather than brown-field sites. By doing so, they make the urban sprawl worse—compounding the problem by attracting the more upwardly mobile members of society out to the suburbs, leaving behind the poor, the elderly and the ethnic minorities. Many of our cities are drab and dreary because of permissive planning policies that encourage building on green-field sites, which constantly robs the cities of the kind of people who could invigorate them—the upwardly mobile. We must ask what building by numbers is doing to our countryside as well as what it costs the taxpayer to build the extra infrastructure required by green-field developments.
The Devon county structure plan demands that two new settlements be built on green-field sites. One of them would be built near Plymouth and the settlement of 2,500 housing units would constitute 35 per cent. of the current demand from Plymouth. However, will that local demand be met given that, despite the fact that its supposed aim is to meet existing demand, the new town will be advertised all over the country? If taking up the Plymouth overspill is the real aim, why not build on existing vacant land and fill existing housing in that city? Why not put under-utilised sites to better use? There are many of them: shops with a vacant upper storey, vacant land in both public and private ownership, and disused dockland sites. Plymouth is a good example of an unplanned city that has grown up by accident rather than design.
Why are we not regenerating our cities? In the 1960s and 1970s, the then Prime Minister, Harold Wilson, launched several urban development initiatives, including the urban programme, the community development project, the education priorities and the young volunteer force, of which I was a director. Those initiatives switched the rates from rural to urban areas in order to finance the needs of rundown inner cities. The Labour Administration in the 1970s switched the rates from rural areas to urban areas in an attempt to regenerate them, and I welcomed that move.
In the early 1980s, my right hon. Friend the Member for Henley (Mr. Heseltine), then Secretary of State for the Environment in the Conservative Government, launched a crusade to regenerate our cities. Fortunately, I was the Member for Liverpool, Wavertree at the time, so I


benefited from that policy. Yet our inner cities continue to empty outwards simply because people can move into a never-ending supply of housing built on green-field sites.
Green-field development prompts the need for schools, shops, sewerage, telecommunications, transport, medical and hospital services and leisure facilities. Who pays for that? It is not the developer. The developer simply connects the houses to the local sewerage system and possibly installs a few telephone and electricity lines. There is a myth doing the rounds that green-field development is much cheaper than redeveloping rundown areas in the towns. It is not cheaper: it is a question of who pays.
Green-field development is not cheap for the taxpayer, who must pay for all the services that new communities require. The only person for whom such development is cheap is the developer, who buys the land, builds the buildings and connects them to the main services. That is why green-field building land is so expensive to buy. I am told that Plymouth brown-field sites sell at about £50,000 per acre, while green-field land outside Plymouth sells for £800,000 an acre. The fact that it is so disproportionately expensive should alert us to the fact that something is wrong. Developers must be, and are, making good profits—so much so that the high cost of green-field land is worth paying.
It is left to the public authorities to pay for the long-term infrastructure and employment provisions of new communities. The council tax payer and the central taxpayer pay. Who pays for the buses that will have to serve the new areas? Is it the developer? No, it is the taxpayer. Who will pay for a new sewerage plant that might have to be built? Is it the developer? No, it is the water rate payer. Who will pay to resurface the roads and build new ones to cope with the extra traffic? Is it the developer? No way. It is the taxpayer, through the Department of the Environment, Transport and the Regions.
When the new green-field developments are advertised in the national newspapers and people—many of them retired—flock to the west country, who will pay for the extra hospital services needed to cope with the influx of elderly people or for the schooling of young families? Is it the developer? Of course not, it will be the taxpayer. Moving people from the cities to the suburbs costs taxpayers money. Who pays to decommission schools and other services in the town and set up new ones in the suburbs? It is not the developer, but the taxpayer.
Why should the taxpayer be drawn in behind the developer who makes the profit on green-field land development, leaving behind problems of declining cities and infrastructure costs for others to deal with? If developers want to build on green-field sites, they should provide the necessary infrastructure. However, there is another problem: developers can pay only if the development is big and profitable. They can pick up the cost of green-field development only if that development is large enough to generate sufficient money. That is why planners advocate building new towns: two dozen starter homes will not make enough money to enable a developer to build a road or a school.
The infrastructure is already in place in our cities. So why build on green fields, destroy the countryside and create endless unnecessary problems when pleasant homes can be built in the towns at less cost to the

taxpayer? It is only bureaucracy that is preventing such development: the bureaucracy of handing down housing figures from Whitehall based on the predict-and-provide policy, the refusal to allow local authorities to trade with each other and the Government's failure to implement their brown-field sites policy.
There is no point arguing about the housing figures: rightly or wrongly, they are being treated as targets by the Government and by the Liberal Democrat-run Devon county council, which has rushed to approve them in the face of Conservative opposition. My argument is about where those houses will be built. I object to the inflexibility of the planning system. Once the figures are handed down from Whitehall, like the ten commandments from Mount Sinai, they are set in stone—mostly in our green fields.
I welcome house building—we need it and local people need it—but it needs to be in the right places. I welcome the building of houses for young people in urban areas so that they can bring back vibrancy to the centre. I welcome the regeneration of ugly urban areas into pleasant residential spaces convenient for young and old alike and close to existing shops, schools and hospitals. I should like to stop the brain drain in which young people continue to leave in droves counties such as Devon and other parts of rural England and retired people flock there in their place, occupying many of the green-field housing developments. I should like enlightened developers, guided perhaps by Government funding, to reclaim poisoned or brown-field land and build land-efficient houses on it.

Mr. Burnett: Will the hon. Gentleman give way?

Mr. Steen: Does the hon. Gentleman think it wise to intervene?

Mr. Burnett: I think it is very wise. Will the hon. Gentleman treat us to his rather idiosyncratic views on fiscal or taxation proposals on development property?

Mr. Steen: I hoped that the Chancellor would treat us to those yesterday, but he did not. If we are to shift the emphasis of building to regenerate our urban areas, clearly there must be tax incentives for the developers, and there are none at present. I was severely disappointed yesterday because I was looking forward to the Chancellor, in his giveaway Budget, giving away what we want.

Mr. Burnett: Does the hon. Gentleman recall that his last debate on this matter was attended by the right hon. and learned Member for Rushcliffe (Mr. Clarke)—a most distinguished former Chancellor of the Exchequer—who distanced himself from the hon. Gentleman's proposals? Does he further recall the chaos that followed the introduction of development land tax and development gains tax?

Mr. Steen: I am glad to say that I do not. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) would have been present today—he wanted to contribute to the debate and support what I am saying— but unfortunately previous engagements prevented him from attending. The hon. Gentleman could have asked him that question if he had been here.
I shall recap because other hon. Members want to speak. The figures are not targets that have to be met by projections; they are not the holy grail. The Government are repeating exactly the same pious imperatives that the Conservatives did in the 1980s. They are pulling out and dusting down the vacant land registers in the Department of the Environment, Transport and the Regions, and if they are not doing so, they jolly well ought to. They were right to state that many houses could be built on brown-field land, but the whole initiative has been precluded from the current structure plans. We do not want jam tomorrow; we need it today.
Talking about jam brings me back to my earlier image of our cities as doughnuts that have no jam in the centre because the planning process has encouraged green-field site development. Cities will be neglected as long as we continue to encourage developers to make large profits on green-field sites because they do not have to pay for the infrastructure costs.
The Government claim to be passionate about the environment. The Liberal Democrats claim to be positively frenzied about sustainable development. Those are meaningless claims because there is no yardstick against which new developments are judged. Some areas of this country—south Devon is one—have reached the maximum size that is possible without there being an adverse effect on the quality of life of the people who already live there. Surely that must be the meaning of sustainable development.
If people's lives are affected by a flood of new housing and new people, the quality of their life changes—and that cannot be sustainability. That is why I have great problems in understanding why the Liberal Democrats on Devon county council talk about sustainable development when they continue ploughing up the land for houses. Perhaps one of the Liberal Democrats present, who have been eager to intervene, could tell me what sustainable development means to them, because it is not working.
Developers cannot be expected to provide infrastructure if the size of the development does not generate sufficient profit for them to do so. The planning gain has to be substantial if new sewers, hospitals and roads are to be built by the developers who cause the need for them rather than retrospectively by the taxpayer. Most of that much-needed infrastructure is already in place in our cities.
Building new towns in east and west Devon will make matters worse. They will further empty the population from the cities and cost the taxpayer an enormous sum in building new services for them. That is not to mention the cost of decommissioning old infrastructure in abandoned urban areas. I remember that, in Liverpool, schools in the inner city were constantly being closed, which cost a fortune. Taxpayers would have to meet the cost of decommissioning all sorts of infrastructure in Plymouth, Exeter and other cities as the people moved out.
It is likely that national advertisements will continue to encourage people from outside the county to drift to the south-west. That rise in migration into Devon is currently at the rate of between 32,000 and 35,000 people a year. That is equivalent to seven or eight times the population of Totnes—or Kingsbridge, which is in my constituency—entering Devon each year. Those figures have been rising as we build more and more houses.
The Government cannot be excused for failing to recognise what is happening and how it will damage the beauty and quality of the environment in the south-west. The Liberal Democrats have even less excuse for letting that damage take place under their very noses. They have approved a massive programme of unsustainable development, and they are answerable to the electorate in Devon for what they are allowing to happen. That electorate must remember that they will have an opportunity to get rid of the Liberal Democrats on 6 May.

Mr. Sanders: Will the hon. Gentleman give way?

Mr. Steen: No, I have given way enough.
Buzz words such as "plan and manage" are fine, but they are meaningless if they allow the building of 90,000 houses all over Devon. Such a level of house building is simply not sustainable. The Liberal Democrats know that; the Government know that and I know that. Politicians in authority and the Liberal Democrats in Devon have no excuse for not taking action to stop that house building. They have the means but not the will or the inclination to stop it.

Mr. Sanders: Will the hon. Gentleman give way?

Mr. Steen: No, if the hon. Gentleman wants to catch your eye, Mr. Deputy Speaker, he can make his own points, provided that I do not go on for too long. There are politicians without backbone and the Liberal Democrats are good examples. They are always passing the buck.
It is not too late for the Government to ensure that new homes, many of which are needed for local people, are built in the right place. Our cities are crying out for new investment, new enterprise and new opportunities. The countryside is Britain's finest asset. To concrete over thousands of acres in the next 12 years will be environmental vandalism of the worst possible kind. The electorate will not forget that betrayal at the next general election.

Mr. David Drew: I am grateful for the opportunity to participate in this debate on well-worn territory. I initiated a debate on this subject last year, and I have intervened on the hon. Member for Totnes (Mr. Steen) in a half-hour debate. Some of us are interested in these issues and continue to battle on.
My stance is fairly well known. I support the Government's approach, but I have not been uncritical on certain points, including housing numbers. I shall concentrate on the household projection and its implications, but first I shall set the issue in context because the Government have done much good work and have had a difficult task given the problems that they were left by the previous Administration.
I was interested to hear the speech of my hon. Friend the Minister for the Regions, Regeneration and Planning to a conference of the Economic and Social Research Council on 2 March, and I heartily agree with many of his remarks. It is only too clear that, unless we take action, we will face difficulties in future. I support, as I am sure all hon. Members do, the movement away from predict and provide and the emphasis on brown-field development, with the


60 per cent. target. I should like to know how the Conservative party could raise that figure, because it has a history of having much lower targets.
There is undue criticism of the Rogers task force. I invited the task force to Stroud. It is doing much good work, but it is not yet ready to complete its report. We shall find out what the report says about fiscal measures and planning changes and I hope that my right hon. Friend the Chancellor will then deal with those. Perhaps now is not the right time for that.
The Labour party is committed to considering the whole area of planning guidance. A number of consultation papers have been issued and I am sure that hon. Members have responded. We look forward to the results. We view the emphasis on the regional dimension as an important departure which should be heartily supported. In a nutshell—I use an analogy from another policy area—we are seeking a firmer, faster and fairer method of planning and implementation.
We have a sword of Damocles hanging over us in the form of the 4.4 million household projection. There is a rumour—perhaps it is now more of a prediction—that the figure is likely to increase when the Government issue their new projection. Paraphrasing the argument of the hon. Member for Totnes, I juxtapose the encroachment into the green-field areas, while our inner cities continue to decline. We must grapple with that problem and turn a lose-lose situation into a win-win situation.
We have long experience of the problems in my county. The debate so far has focused on Devon and Cornwall, but the pain is felt in Gloucestershire and in my district, Stroud. Any meeting on housing is always packed with members of the public, who have an understandable interest in the subject. I congratulate the councillors who have tried to grapple with the issue; it is not always pleasant.
We heard reference to NIMBYism. One person's self-interest is another person's demoralisation and the denigration of his area. The planning process must work properly, or the less privileged will lose out and those who have no voice will always be dumped on. As a politician, I am not prepared to see that happen. We are in politics to do something about it.
There is a need for balance. We must conserve our landscape, where appropriate, but we must also allow evolution in rural as well as urban areas. That means building not on every green-field site, but on appropriate sites in an appropriate way. I shall return to that theme later.
The central tenet of my argument is that there is a fundamental difference between the need for housing and housing need. Recently, we have concentrated on the need for housing, and on delivering what developers tell us there is demand for. We have failed to grasp that those in real need are being let down, in both rural and urban Britain. Contrary to what has been alleged from the Opposition Benches, I have villages where people are crying out for social housing and where the young people are being driven out. That is social exclusion of the worst kind. Why should future generations not be able to carry on living there?

Mr. James Gray: rose—

Mr. Drew: I am aware that the hon. Gentleman wants to intervene, but I am sure that he will understand that I want to keep my remarks fairly brief. Perhaps he will catch your eye in due course, Mr. Deputy Speaker.
There is social exclusion, unfairness and unsustainability. If a village is not living, evolving and moving, it is not a place where many people want to live. They do not want their villages pickled in aspic, to remain as they were in the 19th century. That is not sensible.
Experience has shown that, if development is carried out properly, it can work well. Too often, the problem in rural Britain is that a development is proposed which may include affordable housing or even social housing, the principle is agreed to and the planning application is allowed, but suddenly the developers change their mind and propose a development of four or five-bedroomed executive homes. Lo and behold, the very people for whom the housing was intended are excluded. There are many examples of that, which the Government must tackle.
The problem of the dereliction of urban Britain is not confined to the cities. In the market towns of my region, there is much evidence of the need for regeneration through sensible housing policies, including the possibility of people living over a shop. There are too many barriers, social and economic, to such development. I hope that the urban task force under Lord Rogers will offer new ideas to move it forward.
The difficulties originate in the ever-growing number of housing requirements. I am a critic of the trend-based forecasting on which the Office for National Statistics relies. My argument is that what happened in the past is not necessarily what is happening now, let alone what will happen in the future. I know that consultation has been offered, to examine alternative methodologies and mechanisms. I welcome a debate on alternative approaches to projections.
I readily agree that projections are necessary for planning. If we do not know what we are planning for, it is difficult to know whether we are delivering what is required. However, there is a need for alternatives such as the bottom-up approach, and ways of dealing with issues such as net migration flows, which are particularly relevant in the south-west.
Household projections are not the same as housing projections. I readily admit that questions of social engineering arise, about which some hon. Members may feel uneasy. If the Government are not prepared to consider such matters, who will? We need to understand the effect of the growth in single households. That is not a good thing in itself, although it may be what people want. An analogous case is that of the motor car. We know that more and more cars will eventually lead to increasing congestion and misery.
I have outlined some of the issues that the Government must take up and introduce into the planning procedures. They have a difficult task, but they have made some movement. We need new planning procedures sooner rather than later. I hope my hon. Friend the Under-Secretary will tell us that those will be discussed shortly. We all have a part to play. People feel that they have been excluded in the past, and they have strong views to express. I hope that the debate today will take matters forward.

Mr. Tom Brake: As the dust settles on Mr. Brown's Budget, we should reflect on two missed opportunities—the absence of a green-field


development tax, and the absence of any moves towards equalising the VAT on new build and conversions. Those measures would have helped to reduce the rate of urbanisation, which is running at a rate of 110 sq km a year, and increased the percentage of new homes built on previously developed land, which all parties in the House support.
Such measures would have helped the Government towards their somewhat unambitious target of 60 per cent. of development on brown-field land and reduced the impact on our countryside of the 4.4 million or possibly 5 million—I believe that an announcement is expected shortly—new homes that will be needed by 2016.
The absence of any measures to equalise VAT on new build and conversions will make it virtually impossible to bring into circulation the hundreds of thousands of empty homes in England and Wales. That view is supported by the Empty Homes Agency. I spoke to its chief executive, Ashley Horsey, this morning. He said:
The Government claims to be promoting brownfield development and looking for an urban renaissance. Such action is meaningless if they are not prepared to take real effective action.
It is worth reminding hon. Members of the facts about empty homes. There is a 4 per cent. vacancy rate in the United Kingdom. That is the equivalent of almost 800,000 empty homes. In Holland, the vacancy rate is 2.3 per cent. By matching Holland's vacancy rate, we would create 300,000 to 350,000 new homes.
There are also empty flats above shops. According to a report produced by the Department of the Environment, Transport and the Regions, about 1,500 flats were created above shops between 1992 and 1995. Assuming that conversion has continued at that rate, about 20,000 flats could be created above shops.
Office conversions offer further potential accommodation. Estimates suggest that 20,000 flats could be created in London. Assuming that that figure could be doubled across England and Wales, there is the possibility that a total of 400,000 new homes could be created from office conversions and by utilising empty homes and flats above shops. That figure represents 10 per cent. of the need. We can all imagine how much safer and more attractive our cities and towns would be if those empty homes were brought back into use. By ruling out a green-field development tax, Gordon Brown has sent the wrong signal—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. That is the second occasion on which the hon. Gentleman has made such a mistake, and I hope that he will not do so again.

Mr. Brake: I apologise, Mr. Deputy Speaker.
By ruling out a green-field development tax, Chancellor has sent the wrong signal to developers.

Mr. Drew: Until we have the urban task force's report, no recommendation is in place as to how that would take effect.

Mr. Brake: I thank the hon. Gentleman and I note what he says.
Mr. Brown's Budget was—

Mr. Deputy Speaker: Order. If the hon. Gentleman continues in this way, he will have to resume his seat. He knows the conventions of the House.

Mr. Brake: I am sorry, Mr. Deputy Speaker.
The Chancellor's Budget was, without doubt, a bad Budget for brown-field sites; but other developments could make the Government's task of minimising the environmental and aesthetic damage of new housing estates harder—the creation of the regional development agencies.
In evidence to the Environment Sub-Committee yesterday, the Minister for the Regions, Regeneration and Planning said that the RDAs' role would be to make good the economic deficit in the regions. That is a perfectly valid objective for the RDAs, but another must be to ensure that development is sustainable. That objective is given much less prominence.

Mr. Burnett: Does my hon. Friend agree that we have had a monumental dollop of hypocrisy from the hon. Member for Totnes (Mr. Steen)? Does he recall that the previous Government dictated—

Mr. Deputy Speaker: Order. We must always have temperate language in the House. I would not associate the hon. Member for Totnes or any other hon. Member with hypocrisy.

Mr. Brake: The RDAs will have to track an environmental indicator—the percentage of new homes built on previously developed land. But that is only one such sustainable development indicator. The RDAs will have to pay regard to many more economic indicators.
With the proliferation of the different bodies that will operate at a regional level—the RDAs, the regional chambers, the regional planning conferences, the regional government offices and Whitehall—the potential for confusion about household projections and the preferred locations for development is enormous.
Confusion is the best case scenario. The worst case scenario is a bloody battle between the RDAs and the regional planning conferences, with the former seeking to promote industry and housing in an environmentally sensitive area, and the latter fighting any such development. The potential for chaos is not helped by the Government's unwillingness to state whether regional planning guidance or the RDAs' regional strategies will be pre-eminent.
I hope that PPG11, which is to be reissued at the end of the consultative process, will clear up some of those uncertainties, but the draft has not made a good start. It says:
the Regional Planning Bodies should work with the Government Office and other stakeholders to establish the level of housing required to meet the region's housing needs. In making this assessment the Government's latest published household projections should be taken into account.


It goes on to say:
the Regional Planning Bodies should take a realistic and responsible approach to future housing provision",
and
once the housing requirement in RPG has been established and confirmed by the Secretary of State".
That still smacks of intervention by the Secretary of State. We might yet find that the corpse of predict and provide makes a full recovery on the mortuary slab.
One final aspect which has not been given sufficient consideration in this or other debates about household projections and new residential developments is water provision. As more water is taken from the environment to meet increasing demand, more and more wetlands are drying out. That has been confirmed in reports produced by English Nature, the biodiversity challenge group and the Environment Agency in recent years.
All the new households that will be built will need water, and it is estimated that about 214 million litres a day will be needed. London will need an extra 25 million by 2016. Yet the water supply is already stressed and any further increase in demand will exacerbate the problems, and probably cause drying out on other sites as well.
To cope with the increased demand, new reservoirs and new river transfer schemes will be needed. It is essential that the Government issue new planning guidance to planners to ensure that water is seen as a constraint on new development. That is in line with the recommendation of the Select Committee on the Environment, Transport and Regional Affairs, which stated:
water supply should become a major part of the consultation and planning process. Planning authorities should be given the power to insist that water efficiency measures are included in new houses and to refuse developments where they are concluded that it would not be possible to provide adequate water supplies without damage to the environment.
That national planning guidance must be produced quickly to address issues such as from where the water resources would come and how any additional water demands would be met.
I hope that the Under-Secretary will respond positively to some of my concerns in relation to a green-field development tax, VAT equalisation, RDAs, regional planning guidance and water resources, but he will find it hard to convince the House that the Chancellor's Budget has not scuppered the Government's chance of hitting their 60 per cent. target of development on brown-field sites

Mrs. Linda Gilroy: I share the privilege of representing a constituency in what I hope hon. Members will agree is probably the most beautiful county of Devon. In the few minutes available, I want to tackle some of the issues concerning where the new houses can be built, because some misleading statements have been made about the extent to which the cities can accommodate them.
The space as well as the distance are two of the attractions that generate the desire among constituents of many other hon. Members to go and live in the south-west, and particularly in Devon and Cornwall. As the Under-Secretary of State for the Environment,

Transport and the Regions, my hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), said in a debate instigated by the hon. Member for Totnes (Mr. Steen) on 9 December 1998, we do not live in a Maoist society in which we can ban such migration.
The population projections take account of population change and household formation, and that includes migration. Migration into Devon always comes under the closest scrutiny. For the reasons that I have mentioned— space, distance and beauty—in-migration is a significant factor in some parts of our county, but not within the Plymouth sub-region. Our principle need is for housing to meet the needs of our existing population.
Plymouth is an attractive city. The Shell guide praises its waterfront as one of pre-eminence in the world, and The Independent lists Plymouth as the 26th most interesting place in the world to be at the millennium, alongside other cities such as Moscow and Paris. [Laughter.] Hon. Members may laugh, but there are good reasons for that, to which I may return in another debate. I mean The Independent, not the local rag The Sunday Independent.
The aspiration of many hundreds of thousands of people is for country living in small villages and towns, or something more remote on moor or coast. I prefer city life, but I understand why many of those bringing up families and seeking a peaceful retirement should make such a choice.
If the hon. Member for Totnes and his colleagues believe in choice—I think that they do—he must respect those who chose to move to join us in the many privileges that we enjoy. I hope that he also seeks to represent the interests of those most in need, particularly housing need, in his constituency.
The hon. Gentleman will have noted paragraph 6.12 of the report from the panel that conducted the public examination of the Devon structure plan, which states:
Having regard to the various representations on this matter, the Panel find that there is no convincing evidence to conclude other than that restricting new house building would serve not to stop immigration but to significantly worsen the living conditions of those at the lower end of the housing market.
The report continues:
the Panel fundamentally rejects the view that somehow under provision is not a significant problem. Under provision is likely to hit those most in housing need in the community and damage the housing prospects of the next generation.
The projections for Plymouth predict growth, not from migration, despite the attractions of our city, but from changes in the household needs of the citizens of Plymouth. Meeting those needs will be challenging for us. The structure plan for Plymouth proposes that 6,800 dwellings should be built between 1995 and 2011. Plymouth city council has said that it will seek to provide those dwellings within its boundaries, but that is clearly a tough target. In all previous analysis, the council identified potential for 5,500 sites, and that figure has been based on existing allocations, estimates for conversions of properties into flats and windfall opportunities on small sites.
An extra 1,300 dwellings on top of that known potential is also a tough target. The council is working hard to apply the Government's philosophy, which is identified in the White Paper "Planning for Communities of the Future". However, even with greater use of recycled


lands, it will still be pushed to accommodate 6,800 dwellings, especially because, where redevelopment of poor housing is to take place—often because that housing is unfit and poorly laid out and of an inappropriately high density—the aim will rightly be to reduce density and maintain our precious and, many of my constituents would say, too few, open spaces.
One can say that some debates are timely, but I do not believe that of this debate. On 26 February 1999, the Devon structure plan was adopted by the five strategic authorities. They agreed that the housing proposals in the structure plan would stand, but there is also agreement that they should be closely monitored under the Government's provision of "plan, monitor and manage", as outlined in the White Paper. All five authorities are seeking to progress the structure plan positively. They are committed to a proper process of monitoring and review in the light of future events and the requirements of my right hon. Friend the Secretary of State.
At regional level, the planning guidance for the period to 2016 is being considered. That, too, will provide a proper framework within which the interests and concerns of our local authorities and the constituents of Plymouth, Sutton and of Torbay—as well as the interests and concerns of the constituents of the hon. Member for Totnes—can be properly addressed. I urge the hon. Member for Totnes to take an early flight, as I did this morning, on a clear day and to reconsider, in the light of the space that he would observe beneath him, the contrast between the vast spaces of his constituency and the high density of the population of my constituency and that of my hon. Friend the Member for Plymouth, Devonport (Mr. Jamieson).
I reject the endorsement of the hon. Member for Totnes of the narrow-minded NIMBYism of some of his constituents, many of whom are the very same people who have sought to exercise their choice, as he did, to migrate to our beautiful county of Devon.

Mr. Nigel Waterson: I congratulate my hon. Friend the Member for Totnes (Mr. Steen) on raising this issue and on his masterly exposition of the current situation, particularly in Devon. The beauty of his constituency is second only to that of my constituency. I look forward to visiting his constituency, before it all disappears under concrete.
As my hon. Friend explained, how typical it is of the Liberal Democrats to say one thing about the environment and do something quite different when they are in control. In my constituency, the local Liberal Democrats forced through planning permission to overdevelop Beachy Head, which is a major attraction for visitors to my constituency.

Mr. Burnett: Does the hon. Gentleman think that there is something rather incongruous about the position taken by the hon. Member for Totnes (Mr. Steen)? Does he recall that a housing figure for Devon of more than

100,000 units was dictated by the previous Government? Devon county stuck to its guns and the Secretary of State has agreed to slightly more than 70,000 dwelling units.

Mr. Waterson: I always think that my hon. Friend is noted for his congruousness. The very best of the hon. Gentleman's case is that his colleagues on the council have collaborated in those overdevelopments.
I commend my hon. Friend the Member for Totnes for putting his finger on many of the central issues. He has long service in the House and told us some of the background to recycling land, which is nothing new. However, I suspect that his excellent book "Plums", which I read a long time ago, is out of print.
My hon. Friend described how predict and provide had been replaced by plan and manage. How right he was that these figures should be treated not as targets, but merely as projections, and he drew attention to a central point— the Government's failure to implement their brown-field site policy.
There is considerable expert and political argument over the projection of 4.4 million homes needed by 2016. We have heard that that figure may increase. However, the Government's view seems to be that that is the best available figure in all the circumstances. Conservative Members remain highly sceptical, particularly bearing in mind the fact that there are supposed to be 1 million empty dwellings in this country.
Where are all those new homes to go? The Government still seem to be fumbling for a policy. In the meantime, there are constant encroachments on the green belt, often with the connivance of the Secretary of State. The worst example is the go-ahead given for 10,000 new homes on green-belt land near Stevenage. Nearer my constituency, the Secretary of State is forcing West Sussex to build 58,700 new houses by 2011. We have heard from my hon. Friend the Member for Totnes about the parlous situation in and near his constituency.
Nationally, if new housing continues to be built on green-field sites at the present rate, an area the size of Suffolk will disappear under concrete by the time today's school leavers reach retirement age. The green belt must be protected if we are to avoid urban sprawl, and I am proud that, under the previous Conservative Government, the size of the green belt was doubled.
A great deal of the Government's hopes are pinned on the development of brown-field or recycled sites, but there is growing evidence that their faith is misplaced. Their declared target is for 60 per cent. of new developments to be built on brown-field sites, which is a belated increase from 50 per cent after sustained pressure from Conservative Members, among others. [Interruption.] The Under-Secretary laughs, but he may remember his description of a target of 60 per cent. as a "recipe for disaster".
We have suggested two thirds of new development as a target and, according to the Select Committee, some witnesses suggested that 75 per cent. is feasible. Let us be fair and judge the Government on their stated target.

Mr. Sanders: Is not the problem that brown-field sites tend to be where people are migrating from and green-field sites are in the parts of the country to which people are migrating? That is true nationally and in Devon, where the brown-field sites are in Plymouth.


People do not want to move to Plymouth, however, and the green-field sites are in the county, which is where people want to live.

Mr. Waterson: The hon. Gentleman is being a little over-simplistic, but there is a problem of mismatch as he describes.
Let us judge the Government on their stated target. The problem is that rhetoric and reality have parted company. The Government's performance in respect of brown-field sites is still limping along on a figure of 53 per cent. That is not so much urban renaissance as a new dark age, with concrete being poured indiscriminately.
What has become of the draft consultation version of PPG3? The Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), said on 3 February that it would be with us shortly. He is stretching the word "shortly" a little, but no doubt he will tell us when we will see it. What has happened to Lord Rogers and his task force? I am delighted to learn that they visited Stroud, and no doubt there have been other sightings of them; but when will they produce something with which we can grapple?
We hear a great deal about a "sequential" approach to planning, but that in itself may cause delays and problems. The Under-Secretary may be aware of a study published recently by the Civic Trust and the House-Builders Federation, which focused on 54 potential brown-field sites identified as long ago as 1986. The study discovered that only 39 sites—72 per cent.—had been developed at all in the intervening time, and that only 29, or 54 per cent., had been developed for housing on either all or part of a site. It concluded:
The Government's target of 60 per cent. of new homes to be built on recycled or brownfield land will not be realised unless action is taken to learn from past failings and the process is improved and strengthened".
The study helpfully lists a series of problems that arose in many of the case studies. It mentions the problem of contaminated land, and what it describes as
a lack of flexibility, creativity, technical and market knowledge in some local authorities",
which, it says, can
 "hinder … public/private partnerships".
The whole question of land assembly is often crucial to such developments. It is not a happy story.

Mr. Nicholls: Will my hon. Friend give way?

Mr. Waterson: No.
The Under-Secretary may also have seen "An Urban and Rural Renaissance", an excellent document produced by Shelter. According to the document,
Current planning and housing policies are failing to ensure the provision of sufficient affordable housing".
Shelter makes clear just how many improvements in the planning system are needed to deal with the problems. All too often, that system fails us in terms of the identification and use of brown-field sites. Such studies are important, and worrying.
In his remarkable speech, my hon. Friend the Member for Totnes made an excellent point: he said that there should be an incentive for developers to build in towns,

and a disincentive for them to build in rural areas. I could not agree more; how sad that the Government, in the shape of the Chancellor of the Exchequer, ducked the issue only yesterday.
Perhaps the Under-Secretary has noted, and will comment on, an excellent proposal made by my hon. Friend the Member for South Suffolk (Mr. Yeo). My hon. Friend has suggested a system of tradeable tokens, whereby a developer who built a home on a previously developed site—a brown-field site—would be awarded a token and, as well as obtaining planning consent, those wishing to build on green-field sites would be required to produce two such tokens before they could do so. That would easily, and with minimal administration and costs, deliver the two-thirds target to which Conservative Members currently aspire.
Conservative Members are working hard—that is an example—to protect our environment and to come up with practical, constructive solutions to the problems that any Government will undoubtedly face in this regard. I can promise that we shall continue to drag the Under-Secretary and his hon. Friends to the House until they finally develop a proper and workable policy of their own, to replace the incoherent shambles that lies before us now.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford): I congratulate the hon. Member for Totnes (Mr. Steen) on securing the debate, and on his persistence; he has raised this issue before. As the hon. Member for Eastbourne (Mr. Waterson) observed, his was a remarkable speech, in which he made a number of valid points with which I wholeheartedly agree. He produced a passionate defence of the case for building in cities and regenerating them for the urban renaissance, and for the use of brown-field sites. I entirely agree with him, and hope to say more shortly about what the Government are doing in that regard.
However, the hon. Gentleman showed a certain Jekyll and Hyde tendency, which was most obvious when he delivered what was probably the most emphatic endorsement of NIMBYism that I have ever heard in the House. I do not think that I have previously heard anyone describe "not in my back yard" as a good principle. I believe that I have quoted the hon. Gentleman correctly. He also slightly glossed over his own career pattern, which rather contradicts the course that he has urged on us. He wants us to ensure that there is no move towards green-field building, and to concentrate on brown-field sites. He forgets, however, that, as a former MP for a brown-field constituency in Liverpool, he has gone in exactly the opposite direction—to the green fields of Devon.

Mr. Steen: Regrettably, the boundary commissioners completely destroyed my constituency of Liverpool, Wavertree. Every one of my five wards went into a new constituency, which is now run by the Labour party. I would have stayed in Liverpool had I had that chance.

Mr. Raynsford: I am tempted to say that I hope the hon. Gentleman will have an encounter with the boundary commission in the near future that will enable him to renew his acquaintance with brown-field constituents.
I am afraid that, in a number of respects, the hon. Gentleman did not fully recognise the extent of the changed agenda that the Government are already introducing, which is making a significant difference. I shall give the figures, but, for the moment, suffice it to say that Devon is a very good example of the flexibility of our new system—which, by the way, is "plan, monitor and manage": the word "monitor" got left out. It is working far better than the old predict-and-provide approach that characterised the last Government.
The hon. Gentleman said that there was no scope for local authorities to trade housing targets or housing levels. There is, and the new system provides a very good framework. The hon. Gentleman has a particular problem with the household projections. He also has a problem with how the housing situation in Devon could be better managed. I shall take each point in turn. As he knows, we have changed our approach to establishing housing numbers. Our new draft PPG11—which was entirely misunderstood by the hon. Member for Carshalton and Wallington (Mr. Brake)—sets out our proposals for improving the preparation and content of regional planning guidance. It represents an important step in the modernisation of the planning system, and reflects our commitment to decentralised decision making and integrated policy making to achieve sustainable solutions.
The new arrangements give more responsibility to local authorities, through regional planning conferences, in the preparation of regional planning strategies. They should lead to increased regional ownership of the policies, and increased commitment to their delivery. Instead of the Government, the regional planning body will be responsible for preparation of the draft regional strategy, which will include proposing the amount of additional housing that will be needed in the plan period.
The new arrangements provide a more open and inclusive process for the determination of planning issues at regional level. The new strategies, including the new housing figures, will be tested at a public examination before an independent panel, whose report will be made public. The procedure has been piloted in East Anglia, where a public examination of the draft planning strategy for the area was completed last month. The regional planning guidance for the south-west is still at the pre-draft stage. One of the key tasks of the new-style regional planning guidance will be to advise on the overall level of housing and its distribution within the region, with the aim of making full use of previously developed land.
In assessing the housing provision required for the 15 to 20-year period covered by the strategy, we expect the regional planning body to work with other regional stakeholders to establish the level of housing required to meet the region's housing needs. In the making of that assessment, the Government's latest published household projections should be taken into account—that is perfectly logical and reasonable—but we are not insisting that they are targets, as the hon. Gentleman seemed to think. They are projections, and should be treated as such.

Mr. Nicholls: The Minister has spoken of a policy shift towards planning, monitoring and managing. Is not the logic of that change in policy such that it should be

applied to the present situation in Devon? If things go ahead as planned, Devon will be transformed; it will be wrecked and ruined out of all recognition. The Minister has made a policy change on which I compliment him— now let him follow through the logic.

Mr. Raynsford: Clearly, with any change of policy there needs to be an orderly progression from the existing procedure to the new one. That is what we are doing. If the hon. Gentleman will bear with me when I come to Devon, he will see that the operation of the principles that underpin the Government's new approach is having a positive impact in Devon. I hope that he will recognise that.
As well as looking at the Government's figures as guidance, not as a target, we expect regional planning conferences to undertake urban capacity studies to explore the implications of changing policies and standards, which would reduce the land take of new development while securing attractive residential environments.
Against that background of need and capacity, the regional planning body should be able to take a realistic and responsible approach to future housing provision. It must be prepared to justify its views fully in public at the examination—that is fairly obvious. The structure plan and unitary plan authorities will, of course, be party to that process, so there is plenty of scope for them to negotiate and to discuss the apportionment between them.

Mr. Steen: The problem is that the west country is run by the Liberal Democrats. They control the county council, the district council and the unitary authority, so it is the Liberal Democrats talking to each other.

Mr. Raynsford: The hon. Gentleman displays a curious degree of ignorance of local politics. Is he not aware that the distinguished city of Plymouth is a Labour-controlled authority? He appears to have a complaint about the process of democracy. We are all here courtesy of that process and we should respect the verdict of the electorate.
The presumption is that, once the housing requirement has been established and confirmed by my right hon. Friend the Secretary of State following the public examination, structure plans and unitary district plans should focus on the broad distribution and location of growth. The essence of the plan, monitor and manage approach is that both the assessment of housing requirements and distribution within the region should be kept under review. If there are signs of either under or over-provision, we expect both RPG and development plans to be reviewed accordingly. We need to work together in ensuring that the new approach is developed in as constructive a context as possible.
I want to deal with the points that were made by the hon. Member for Totnes about the Devon structure plan and the county's proposed new settlements adjoining Exeter and Plymouth. As I have mentioned, household growth is a fact and it is for local authorities in each area to find the best possible solutions for managing the growth sustainably. We cannot turn our back on the need to house people, and I do not think that any hon. Member would suggest that.
The Devon structure plan was not imposed by the Government; it was proposed and adopted by the local authorities on 26 February. That outcome shows that the


plan, manage and monitor approach is flexible, while maintaining our commitment to ensuring that everyone has the opportunity of a decent home. That approach is based on a thorough analysis of the available evidence.
The structure plan has raised two main issues: the overall figures for new housing and proposals for two new communities, one near Exeter and the other near Plymouth. Obviously, I shall concentrate on the one near Plymouth. First, I shall look at the overall housing provision. Regional planning guidance figures were agreed by the authorities in 1994 under the previous Government. They indicated 83,000 extra houses in Devon between 1995 and 2011, based on 1989 household projections. The independent panel that examined the plan in public in 1997 tested it against more recent 1992-based projections. Unusually, those projections were lower than the 1989-based set, and the panel therefore recommended 79,000 extra houses, a reduction of some 4,000 on the previous figure.
The five structure plan authorities published modifications in October 1998—at that stage, under the present Government. They proposed a lower figure still of 75,800 houses, 3,200 less than the figure that was recommended following the examination in public. There were two reasons for that. First, actual house building during the 1990s was well below the rates that were projected both in regional planning guidance and by the panel: during 1995–97, a period for which figures were not available to the panel, 2,100 fewer homes than the projected number were built. Secondly, it was felt that the achievement of Government objectives to reduce vacancies in the housing stock would absorb more of the extra households—an estimated 1,100 more.
After careful consideration of those proposals in the light of our new policy, spelt out in "Planning for the Communities of the Future", the Secretary of State accepted that the county's proposal for 75,800 houses did not need to be raised. We accepted its case that lower than expected house building during the mid-1990s did indicate a lower requirement for the period to 2011. That should not be taken as a precedent for other counties because circumstances vary from county to county.

Mr. Sanders: Will the Minister give way?

Mr. Raynsford: I will in a moment.
House building rates can be affected by a variety of factors—for example, land availability or other supply-side problems. The circumstances in Devon do not suggest supply-side limits to house building. In addition, the county level, 1996-based population projections that were published by the Office for National Statistics in December 1998 show a further small reduction in projected population growth for 1996–2006, which weakens the case for raising provision.

Mr. Sanders: I want to clarify that point and get it on the record. Is the Minister saying that the amount of housing that has been accepted by the Government is less than was originally predicted under the previous Government and, therefore, that the comments of the hon. Member for Totnes (Mr. Steen) were less than accurate?

Mr. Raynsford: Yes, I can confirm that, but I am surprised that the hon. Gentleman could not have drawn that conclusion from what I said. I thought that I had made it clear that that was the case.
We do not regard new communities as free-standing new settlements, as described in "Planning for the Communities of the Future." As proposed, they are distinct, compact new neighbourhoods close to, and with good links with the two cities concerned.

Mrs. Browning: Will the Minister give way?

Mr. Raynsford: I am afraid that I cannot give way to the hon. Lady. I know that she is greatly concerned about the matter, but I have only three minutes left and I have important matters to cover. I am sorry.
On the plan for Plymouth, no precise location has yet been proposed and no name has yet been given to the new settlement, but it is proposed that the development might be between half a mile and three miles from the urban edge of Plymouth.
The independent panel endorsed the new community proposals as potentially the best way in which to secure balanced and sustainable communities with the proper level of services and facilities. The Exeter community is related to large-scale employment development and a rail freight terminal proposal. The Plymouth one is being developed to meet the need for accommodation for people from Plymouth, which was graphically described by my hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy).
The whole aim is, of course, to ensure that we concentrate development in areas where it is appropriate and sustainable, rather than allow indiscriminate development across a wide area of rural Devon, which clearly is the concern of the hon. Member for South-West Devon (Mr. Streeter), whose comments on the proposals, from what I have seen, have been entirely responsible and appropriate. The alternative to new settlements would be indiscriminate and unsustainable housing development. I do not think that anyone would welcome that.
The way forward lies in building on the positive options for meeting housing requirements and for protecting the countryside. There is far more common ground than is sometimes acknowledged. Everyone wants to see as much land recycling as possible and more sustainable patterns of development, to protect the countryside, to regenerate urban areas and to ensure that people are properly housed. The Government are developing that agenda as proactively as possible. There is much more work to be done to help authorities to develop that agenda.
We have a full programme of revising the relevant PPG notes. We will shortly publish the draft PPG3, which will detail policies to underpin our recycling target. We expect authorities throughout the country, including authorities in the south-west, to do their bit to maximise land recycling. We are also working on other planning guidance notes, such as those on transport, and have published draft guidance on regional planning and development plans.
The Government are acting positively, seriously and responsibly in dealing with an important agenda. That contrasts with the previous Government—

Mr. Deputy Speaker (Mr. Michael Lord): Order. We must now turn to the next debate.

Hornchurch Fire Station

Mr. John Cryer: I thank Madam Speaker for choosing this debate, which is a very important one for the people in the area represented by me and my hon. Friends the Members for Upminster (Mr. Darvill) and for Romford (Mrs. Gordon). I also thank the Minister, my hon. Friend the Member for Knowsley, North and Sefton, East (Mr. Howarth), who will reply to the debate.
I have been involved in the campaign to keep Hornchurch's second fire pump from even before the cut was announced—as there had been some indication that there would be such a cut. In the past three or four months, there has been a magnificent campaign— particularly by the Hornchurch fire fighters, who led the campaign, and by the people of Hornchurch—against the cut. A few weeks ago, we had a public meeting outside the fire station that attracted about 1,000 people, who were primarily from Hornchurch but also from Romford and Upminster. Previously, we had a public meeting that attracted about 200 people.
I have received about 1,000 letters on the issue, including one recently from officials and representatives of the Royal College of Nursing, who object to losing the engine both on health grounds and because of the area's many nursing homes—particularly in the more far flung and vulnerable parts of the ground—and other health facilities, such as our two hospitals and many doctors' surgeries. Two particularly far-flung nursing homes are in the constituency of my hon. Friend the Member for Upminster.
Recently, Hornchurch fire fighters and I handed in to No. 10 Downing street a petition containing the names of 40,000 people who want to keep the second pump at Hornchurch. We also handed in to the London fire and civil defence authority, on Albert embankment, approximately 12,000 consultation leaflets that had been completed by local people, all of whom were against the cut and said that they were willing to pay more, in council tax and perhaps in other charges, to keep the fire pump in Hornchurch.
All of those representations have been ignored by the London fire and civil defence authority, which has treated the people of Hornchurch contemptuously. Tony Ritchie, the authority leader, and other authority members have simply brushed aside the opinions of the people of Hornchurch and those living in other parts of the ground, saying, "We're going to get rid of the pump anyway." They have been absolutely contemptuous.
Hon. Members should remember that since 1986, 63 pumps have been cut from Greater London fire stations, 14 of which have gone since the Docklands bomb—on a night when the London fire authority was pulling in pumps from as far away as Essex and Surrey. The cuts make us wonder whether we could cope in London if there was another, similar massive disaster. In addition to previous cuts, the LFCDA is planning to cut another five pumps across London. Today, however, I am dealing specifically with the Hornchurch pump.
The London fire authority has a £5 million reserve in the bank and, in the current financial year, an underspend of £6.5 million. Very likely, there will be an underspend

also in the next financial year. I therefore cannot understand why the authority insists on cutting the Hornchurch pump or the other four pumps. I shall certainly watch the future career of Tony Ritchie with great interest.
My ground of Hornchurch is one of the biggest—the second biggest—in Greater London. We have had two appliances since 1936, when Hornchurch was still a village. Many older people in the area still refer to Hornchurch as a village. In 1936, both Rainham, in the south, and Upminster were also tiny villages. Since 1936, there has been an enormous expansion not only in the population, which has increased many fold, but in roads. We now have the M25 and the A127, on which the Hornchurch pumps spend a great deal of time. Hornchurch's pumps spend a lot of time covering the A13 and the A12 also, although they are not in our ground. All of those roads are hugely busy, particularly at rush hour, taking people in and out of London.
There has also been enormous industrial development in the ground. The Fairview estate, for example—which is in the south of my constituency—often has to be covered by the Hornchurch pumps. Ferry lane, which also is in my constituency, frequently has fires and problems that must be attended by our fire brigade. All those developments—including increased industrialisation— have occurred in the past 50 years.
Traffic jams on the big roads—particularly the A13, A127 and M25—often entail enormous tailbacks. People leave the main roads, go on to back roads that they do not know very well, drive too fast and have accidents. Therefore, there are major problems on the back roads that also have to be attended by the Hornchurch pumps.
In the past few years, risk categorisation in the borough of Havering has been greatly reduced. At one time, parts of Romford were A risk, and Hornchurch was generally B risk. Now, the ground has nothing but C and D risk areas. That is unfair. Even on the basis of current risk assessment, there is no reason why Hornchurch and Romford should not be categorised as B risk. Arguably, parts of Romford should be classified as A risk.
Currently, the Home Office is conducting a fire cover review. I argue today—as I did in a previous debate on the subject—that, until the review is completed, there should be a moratorium on cuts in front-line fire cover in Greater London. I hope that the review will recommend using risk-based assessment. However, until the review is finished, we shall not know the future basis of fire cover. I believe that the use of risk-based assessment will ensure that there will be at least two pumps at Hornchurch for ever and a day.
In the past two years, the number of two-pump call-outs at Hornchurch has increased from 396—in 1997—to about 430 last year. There is not yet a definitive figure for 1998, but it will be at least 430. Nevertheless, there has been an increase in the number of two-pump calls, which is the crucial factor when considering cutting the second pump at Hornchurch fire station. Last year, the total number of calls was 1,410—not 960, as the fire authority claimed—which includes calls to fires in other grounds.
I put those figures to the authority leader, Tony Ritchie, but he failed to respond to them. At a meeting well before Christmas, I told him the figures; he failed to respond. Shortly before the meeting at which the authority decided to proceed with the cut of five pumps, I again gave him


the figures; again, he failed to respond. If he is prepared to treat a Member of Parliament like that, I wonder how he treats members of the public who approach him saying that they do not want any more cuts in the fire service. It makes the mind boggle.
In the past two years, the number of fire deaths in London have increased by one third. I cannot believe that that crucial fact—the huge increase in the number of fire deaths—is completely unconnected to the fact that there have been so many cuts in the London fire service. If we continue cutting, we shall have more loss of life and more serious injury.
Only last night, I discovered that—according to Hornchurch fire fighters—on Saturday, 30 January, Hornchurch was without fire cover for three hours: the station was empty, the pumps were out and no cover was provided by other stations. If Hornchurch is already going without fire cover for three hours on a Saturday—which is surely one of the station's busiest times—I should think that even the idea of cutting Hornchurch's second pump is simply dicing with death.
I have a strong personal view on the matter. My family lives in one of the more vulnerable parts of the ground, in Upminster. I do not want to see our home going up in smoke—and cutting the second pump would put families like mine at risk. I cannot see how we can continue to cut fire pumps from across Greater London and expect that there will not be an increase in deaths and injuries. The slogan of the Fire Brigades Union for many years has been "Cuts cost lives". That encapsulates what I am saying today. We cannot afford any more cuts and we certainly cannot afford to lose the fire pump at Hornchurch. I look forward to my hon. Friend the Minister's response.

Mr. Keith Darvill: I congratulate my hon. Friend the Member for Hornchurch (Mr. Cryer) on securing this debate and I endorse and support what he has said. Hornchurch fire station serves part of my constituency, as my hon. Friend said, and in particular Emerson Park, Cranham, Upminster and part of Harold Wood. That is a large area. In terms of area covered, my constituency is one of the largest in Greater London. It is no coincidence that Hornchurch fire station serves such a large area.
My constituents are very concerned at the chief fire officer's recommendation, which has now been endorsed by the London fire and civil defence authority. I share their concern. Like my hon. Friend, I live in the ground covered by Hornchurch fire station. I have been inundated by representations and messages of support for the campaign against the decision. My postbag is full of complaints from constituents; I am lobbied every time I walk down the high street and my friends and neighbours constantly raise the issue with me. It is a big issue in the area.
I had the opportunity to speak in an Adjournment debate a few weeks ago on the London fire services obtained by the hon. Member for Twickenham (Dr. Cable). I raised a number of points to which my hon. Friend the Minister helpfully said that he would respond in writing. I look forward to his response. I shall not repeat those points today, as I know that time is short, but I take this opportunity to request an early meeting with

my hon. Friend the Minister to make further representations to him on behalf of my constituents, who are very worried. In the mean time, I urge him to consider the enormous number of representations that I know are being sent to him and to my right hon. Friend the Home Secretary.
There is a strong case for a postponement of the decision. I know that the risk-based assessment for fire cover is being reviewed. Changes in the London emergency services will come about as a result of the Greater London Authority Bill. I know that the finances of the LFCDA could tide us over until those changes happen.
Hornchurch does not merely provide direct fire cover. As my hon. Friend the Member for Hornchurch said, the area is surrounded by the M25, the A13 and the A127. They are busy roads and there are numerous accidents on them. The firefighters tell me that they are constantly called out to road traffic accidents on those roads. They are frequently able to save lives because advances have been made in ambulance services and improved treatment can be given to accident victims. My concern is that a reduction in the number of fire appliances will not only reduce the fire cover but reduce the number of incidents that the fire service can get to quickly to save lives.
The chief fire officer's recommendations are based on minimum cover. I believe that we should strive not merely to achieve minimum cover, but to obtain better cover for the area. A reduction in the number of fire appliances in Hornchurch will affect not only the ground but other parts of the area, including Romford, Dagenham and Wennington, which are covered by Hornchurch when local services are called out to emergencies. Our constituents' genuine concern is important. As the Members of Parliament representing the area, we need to emphasise that to Ministers. With all that in mind, I look forward to my hon. Friend the Minister's reply.

The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): I congratulate my hon. Friend the Member for Hornchurch (Mr. Cryer) on securing this debate on Hornchurch fire station and my hon. Friend the Member for Upminster (Mr. Darvill) on his speech. I think that my hon. Friend the Member for Upminster is aware that this Minister is always willing to meet right hon. and hon. Members if they have a problem, as they perceive it, in their constituency. He may not be aware that my hon. Friend the Member for Hornchurch has already written to me asking for a meeting, and in a letter of 8 March I responded saying that I would be willing to meet him. If the arrangements have not been completed, they are certainly under way.
As hon. Members will know, there was a serious, tragic and horrific fire in Chingford last week. Our sympathies go out to all the friends and relatives of those who died in that fire. The cause is very suspicious and arson is strongly suspected. Regrettably, arson has increased considerably. In the past decade, 1.7 million fires have been started deliberately, causing 22,000 injuries and 1,100 deaths. We shall be publishing shortly the outcome of a Home Office review, which has examined the current arrangements for combating arson and will recommend a range of new measures arising out of that.
Hornchurch appliances were not called to the Chingford fire so I can now turn to the subject of today's debate. I fully understand the concern that my hon. Friends have


expressed today and during last month's debate on the London fire service, about the proposal by the London fire and civil defence authority to remove a fire appliance from Hornchurch fire station.
As I said last month, we have good reason to be proud of the fire service in this country. It achieves consistently high standards of performance, often in difficult and hazardous circumstances. The fire service's high level of performance in responding to fire calls has been confirmed year after year by the Audit Commission. So it is with good reason that the fire service is highly regarded by the public, both in Hornchurch and elsewhere in the country. The key point to stress is that the statutory responsibility for the provision of an efficient fire service rests with the fire authority, and, in the case of Hornchurch, with the London fire and civil defence authority.
It is for the authority to keep its fire cover provision under review and to set a budget that will allow it to meet its statutory and other obligations and, in particular, to provide a service that meets the national standards of fire cover. However, under section 19 (4) of the Fire Services Act 1947, the fire authority cannot reduce the number of fire stations, fire appliances or fire-fighting posts without the express permission and consent of my right hon. Friend the Home Secretary.
My right hon. Friend has a specific role in considering section 19 applications. He will grant approval only if he is satisfied on three counts. The first is that the proposals have been sufficiently widely publicised, in sufficient detail and with adequate time to enable any interested party to make representations. The second is that the representations have been considered by the fire authority. The third is that Her Majesty's inspectorate of fire services advises that the national standards of fire cover will be maintained if any of the proposals were implemented.
There is no statutory requirement on the fire authority to consult, but my right hon. Friend and I consider it important that proper consultations are undertaken. Once a section 19 application has been made, we will also take into account representations made to us direct. We will consider and reflect carefully on the points made by my hon. Friends today. Our primary concern is the maintenance of the national fire cover standards. Successive Secretaries of State have interpreted the duty to provide an efficient fire service against those standards.
At the beginning of this month, we received the authority's application to remove the second pumping appliance from Hornchurch and from four other fire stations around the capital. We are seeking advice from Her Majesty's inspectorate of fire services on the authority's proposals. We shall ask the inspectorate to look carefully at the representations of my hon. Friend the Member for Hornchurch and any that other hon. Members, organisations or individuals may make. I assure my hon. Friend that we shall not approve any proposal unless we are entirely satisfied that national fire cover standards will be maintained.
The authority's latest proposals result from a review of its fire cover. All fire authorities are obliged to review the fire risks in their area regularly against the national standards to ensure that the brigade's deployment

of resources is updated in the light of changing circumstances. That is not contentious. Most people agree that it is sensible to do so.
It may be helpful if I explain the national standards in a little more detail, because they were an important part of my hon. Friend's speech. The standards are not just nationally recommended; they are nationally agreed in the Central Fire Brigades Advisory Councils for England and Wales and for Scotland, which are constituted under the Fire Services Act 1947 to represent fire service interests in advising the Secretary of State. The standards lay down terms for the number of appliances and also the speed of response in the initial attendance to a fire. They rest on four main standards of service, which depend on the risk category of the area, and assume for each category that a predetermined number of fire-fighting appliances should attend within a specified time. The area served by Hornchurch fire station has been assessed as 55 per cent. C risk and 45 per cent. D risk. My hon. Friend has suggested that Hornchurch should be reclassified as B risk.
Under the national standards, a brigade should aim in normal circumstances to meet the following response times: in a B risk area, one pumping appliance to arrive in five minutes and one within eight minutes; in a C risk area, one pumping appliance to respond to the incident within 10 minutes; and in a D risk area, one pumping appliance to respond within 20 minutes.
In considering the section 19 application, my right hon. Friend the Home Secretary will want to be assured by Her Majesty's inspectorate that the area has been correctly categorised for fire risk and that, if a pumping appliance was removed from Hornchurch, the brigade would continue to meet the above standards.
In 1995, the Audit Commission recommended that there should be another review of the standards of fire cover. The commission recognised that no fundamental change should be considered without careful research. That recommendation was taken forward by a further joint committee of the advisory councils. Its report "Out of the Line of Fire: Modernising the Standards of Fire Cover" was published in July 1998.
The advisory councils have endorsed the report's conclusions in favour of risk assessment as a more flexible approach to planning fire cover that explicitly addresses the risk to life. Pilot trials are in hand with a number of brigades, including London, to confirm the practicality of that approach and, if successful, what the arrangements for implementation should be. However, that is a longer-term project. In the mean time, the existing standards of cover continue to apply.
When the authority set its budget for 1999–2000 on 18 February, it had to take into account the local government finance settlement and the implications for its reserves and assess what savings it should seek to make. The local government settlement provides a £143.6 million overall increase in the fire service element of total standard spending in England—an average annual increase of 3.5 per cent. over the next three years. That includes £ 47.1 million—3.6 per cent.—for 1999–2000. London's share is an above-average increase of £9.9 million—3.8 per cent. That follows an increase of 5 per cent, in 1998–99. The settlement, which I am proud of, acknowledged future funding pressures, notably on


pensions and training, which were identified by fire service interests. It should help fire authorities to plan ahead on a more stable funding basis. The settlement has also set the fire service a challenging efficiency target of 2 per cent. a year. The best value initiative should play a key role in assisting fire authorities achieve that target.
I shall reflect carefully on the points that have been raised in the debate. There are matters of significance and concern that we have to take into account.
It might be worth spending a few minutes on our approach to community fire safety. We want progress to be measured against our commitment to community fire safety. To that end, we have publicly set a target of reducing the average number of house fire deaths by 20 per cent. over the next five years. That move towards prevention is a step change for Government policy and for the work of brigades. Prevention work should be regarded as the first line of defence against fire. The vast majority of fatal fires are accidental and therefore preventable. However, the speed with which fire spreads and smoke kills often means that no matter how quickly the brigade arrives, it can be too late.
In this financial year, we have provided an extra £ 12 million to the fire service in England to undertake community fire safety work, thus implementing a key recommendation of the Audit Commission report on funding fire prevention. We have also recently established a national community fire safety centre, which will take forward the objective of reducing fires and casualties and act as a resource for fire brigades in England and Wales. I announced last December that we would be providing the new centre with £14 million of funding over the next three financial years to run high-profile safety campaigns in conjunction with every brigade. We have also conducted a major national smoke alarm television campaign for fire brigades, including London, to make sure that every householder has a smoke alarm and maintains it properly.
It is disappointing that house fires and fatalities in London have increased, particularly when other metropolitan brigades have been able to achieve significant reductions in recent years. However, the brigade is not alone in seeing such increases and the national trend has been upwards since 1994.
We recognise that without intervention the projected trend for house fires is set to increase. We are not prepared to let that situation arise and have therefore put in place a wide range of measures to reduce the number of house fire deaths. We are working closely with London and other brigades to ensure effective community fire safety arrangements. Whatever the outcome of the Hornchurch proposals, I know that my hon. Friends the Members for Hornchurch and for Upminster will support us in our endeavour.
As I have said, we shall reflect carefully on the points that have been made in this debate and seek advice from Her Majesty's inspectorate of fire services on the section 19 application and all the representations that have been made. We shall not approve any application unless we are entirely satisfied that the national fire cover standards will be maintained and the safety of the public in Hornchurch and elsewhere is assured.

DNA Sampling

Mr. Steve Webb: I am grateful for the opportunity to raise my concerns about the use by the police of DNA samples collected during their investigations for the purposes of subsequent investigations, and others taking place at the same time.
My concern about the issue arises from a tragic situation in my constituency—the story of Louise Smith. On Christmas eve 1995, Louise left home with her friends to go to a local nightclub, and did not return home. On Christmas day, Louise's family reported to the police that she had not returned home, and thus began a difficult and protracted investigation.
About three weeks later, a search was conducted for Louise's body, and more than 10,000 local people took part. The fact that so many people turned out showed the strength of feeling in the community, the solidarity with Robert and Gill Smith—Louise's parents—the sense that any parent would dread to be in the same situation and the desire simply to do something to help. I understand that my predecessor as the Member of Parliament for Northavon took part in the search—not with high profile or fanfare, but as a member of the public. That is a tribute to his decency.
Sadly, no body was found, and the agony and uncertainty went on until the middle of February 1996, when two boys playing in a local quarry discovered Louise's body, which had been carefully hidden. The police inferred from that, and from other circumstances, that the murderer was a local man, or certainly a man with strong local connections. Thus began a murder hunt which was to last for many months.
As the body had been found—and despite the circumstances—it was possible to obtain a DNA sample, although it was some eight weeks after Louise had died. I gather that such a gap was almost unprecedented. As a result, Avon and Somerset police felt that they were able to use DNA methods to try to track down the killer.
One of the first things to happen was that a number of people recognised a photofit of the suspect that was issued, and a DNA test was undertaken on that person. The DNA test proved innocence. In other words, someone who, under other circumstances, might have been pursued by the police, was eliminated from their inquiries early on. By April 1996, 400 DNA tests had been carried out on local men. By November 1996, that figure had reached 2,000, and, by Easter 1997, more than 4,500 DNA samples had been taken from local men who had volunteered, if only to be eliminated from inquiries.
In March 1997, a man named David Frost was swabbed for a DNA sample—not locally, but in South Africa. He was a local man, but was in South Africa. The DNA samples matched. He came back to the United Kingdom, was arrested at Heathrow airport in April 1997 and was charged with murder. In the way of these things, it was not until February 1998 that the case came to court. At the last minute, he changed his plea to guilty, and he was sentenced to 14 years on a tariff.
The process, sentencing and so on raised wide issues that are beyond the scope of this debate, but the point made to me by the family—which I fully accept—was that the majority of those tested were not suspects in the


inquiry. Even David Frost, the killer, was not a suspect when originally asked to give a DNA sample. On the other hand, serious suspects were arrested and swabbed during the inquiry, but were quickly eliminated because of DNA testing.
The key issue is the use of those DNA samples, and what happens to them after the inquiry. My understanding of the law and the practice is that the only DNA sample that may be retained is that of the killer. By law, all the other samples that were offered must be destroyed. I understand that another inquiry was going on at the same time elsewhere in the south-west, and that the police were prohibited from using the samples collected in one inquiry for use in the other.
Superintendent John Newman, in addressing the Police Superintendents Association conference in September of last year, said that the inquiry was one of the largest that Avon and Somerset had undertaken. With regard to the DNA samples, he said:
The murder inquiry quickly became one of the largest ever inquiries conducted in Avon and Somerset
and said that the inquiry as a whole cost well over £1 million. He added:
It also involved the largest ever intelligence led mass screen".
I understood that to mean that not all the men in the local area were swabbed, but that the police used their intelligence and what they could work out about the killer to screen and select a smaller number of men. None the less, more than 4,500 swabs were taken.
Each individual swab costs £37.50 to analyse. Added to that are the costs of cool boxes, polaroid film, fingerprint examinations and cameras, and the cost comes to about £41 per item. When that is multiplied by more than 4,500 swabs, the cost comes to between £200,000 and £250,000.
The Minister will understand why the family were dismayed to learn that all that police time, money and effort—although it helped to identify the killer—resulted in the swabs and the information being destroyed. They could not be used by the police in other inquiries at the same time, or in subsequent inquiries.
Clearly, the police's view was that they had spent a large amount of money on the inquiry, and they did not regret a penny of it because of the outcome. On the other hand, money must be best used and should not be wasted. One might ask whether this situation will arise again, and God forbid that it should. However, another young girl was murdered recently in a neighbouring area, and another police inquiry was launched. It is not stretching credibility too far to imagine that we might have to go through the whole process again. This would put a burden not only on the police and their resources, but on the good will of the local population. As I have said, there is tremendous good will towards the family.
Many people would sensibly say that, if they willingly came forward and offered a sample, and if they were offered the positive choice—with no pressure—of giving their consent to the sample being retained for future use by the police, their wish in that respect should be honoured. When they realised that the samples had to be destroyed, the family wanted to do something about it.
With the backing of a local newspaper, they launched a petition, which I presented to the House last night. The petition points out the waste of police and public time and

money if samples are destroyed. The petition calls upon the House of Commons to seek amendment of the Police and Criminal Evidence Act 1984—our initial guess at how we might achieve success. I hope that the Minister will advise me whether that is the case, or whether a change in police practice or paperwork—or some other means—could achieve the outcome.
Indicative of local support for the family and the campaign is the fact that more than 9,000 local residents—principally from the Yate-Chipping Sodbury area, but also from around the country—signed the petition. It is easy to get signatures for a petition about the closure of a local hospital because the issue is simple and easily expressed. This, as will be apparent, is a complex and sensitive issue, and the family have spent days in shopping centres, gathering petitions. They have gone over the matter again and again because they feel passionately that something is wrong.
I pay tribute to Robert and Gill Smith—Louise's parents—and to the family for the way in which, through dreadful circumstances, they have tried to seek the good and the positive. They have behaved with dignity throughout. Since Louise's death, the family have tried to support and help the police in dealing with the victims of crime. Their experience was that the police were supportive and helpful but that they were inexperienced and did not necessarily know how to handle people who had suffered the death of someone close to them. I pay tribute to what the family have done in trying to turn things to the good and to their efforts in getting up the petition.
I am grateful to the Minister both for responding to this debate and for his generosity in being willing to see the family briefly later today. I ask him to respond to a heartfelt plea from the family and from me. One small change, whether in practice or in legislation, could mean that police time is not wasted and that maximum use is made of the efforts of volunteers and the general public. It is a matter of common sense that action should be taken.

The Minister of State, Home Office (Mr. Paul Boateng): I want to take this opportunity to extend my sympathy to the parents of Louise Smith, the victim in this tragic case. The facts of the case make a powerful argument for the use of DNA testing, which led to the conviction of the perpetrator of that dreadful crime. The officers responsible for the arrest and the investigation are to be congratulated.
The way in which the whole community—about 10,000 people, as the hon. Member for Northavon (Mr. Webb) said—came together to assist in the initial search is a prime example of the commendable solidarity and community spirit that one would like to be spread more widely, as a sign that each and every one of us takes responsibility for the welfare of others.
DNA technology is a vital intelligence tool that we want the police to have at their disposal. It is changing the face of criminal investigation in much the same way as fingerprinting did at the turn of the century. The opportunities that it creates for advancing the battle against crime are to be embraced.
The Forensic Science Service has been operating a national DNA database on behalf of the police since 1995. It currently holds about 490,000 profiles of suspects and


offenders and 49,000 profiles from crime scene stains. Advances in technology have increased the number of investigations in which DNA plays a part. It can help to reduce the time taken to identify suspects and plays an increasingly important role in subsequent trials.
The Forensic Science Service has performed a real public service in advancing DNA techniques, making the tests increasingly sensitive to smaller amounts of material. The hon. Gentleman drew attention to the fact that, despite the seven or eight weeks that had passed since the body was hidden, it was still possible to take samples that were to prove so helpful in bringing to book the perpetrator of this awful crime. We can now identify an individual's DNA profile from a fleck of dandruff or part of a hair root. We are keen for this investigative tool to be developed and used further.
The circumstances under which DNA can be taken and the arrangements for the destruction of samples are broadly the same as for fingerprints and are dealt with in the Police and Criminal Evidence Act 1984, which was amended by the Criminal Justice and Public Order Act 1994. The database is also registered with the Data Protection Commissioner.
DNA profiles are retained in a searchable form on the national database only if the suspect is convicted or cautioned for a recordable offence or if action against an individual is on-going. If an individual has been eliminated from an inquiry, the law as it stands requires that a DNA sample must be destroyed; and if the same individual is subsequently involved in another inquiry, samples have to be retaken and another entry made on the national DNA database.
Mass screening is used only in the most serious unsolved cases. It involves the taking of voluntary samples—skin cells from inside the mouth, or head hair— from a targeted section of the population. The profiles are then compared against a sample from the crime scene to see whether there is any match. If a match occurs, the police are advised, and the donor is asked to provide a blood sample, which is then tested against the crime scene sample, and if that confirms the result of the mass screening sample, the police can pursue their inquiries with a probable suspect.
There have been 110 mass screenings to date. The mass screening following the murder of Louise Smith was the largest ever undertaken, involving the analysis of more than 4,500 samples, and it resulted in a successful conviction. Mass screenings can result in the identification of a suspect when all other investigative techniques have failed. The advantage is that only a targeted section of the population need be screened—for example, local men in a specific age range—and the innocent can be quickly eliminated, as was the case in the murder of Louise Smith. The samples are put not on the national DNA database but on a dedicated mini-database, established solely for the given inquiry. If the profiles show no match, the samples are destroyed.
In some circumstances, either because of geographic location or because certain individuals fit the profile of possible suspects in more than one investigation, individuals may be approached a number of times to act as donor volunteers in mass screenings. That is one effect of the safeguards afforded by the current legislation.
One can well understand why the family of Louise Smith should feel as they do, as the hon. Gentleman said, about the time and expense that could be saved by

retaining DNA profiles. It is an important issue that is certainly worth exploring, and I welcome the opportunity to do so, but the advantages of retention have to be balanced against proper legal safeguards and wide-ranging concerns, and fundamental civil liberties issues are involved.
It is important to ensure that any changes do not discourage volunteers from participating in mass screenings. The hon. Gentleman will appreciate the importance of that because, if Louise Smith's killer had refused to participate in the screening, the matching of the sample could not have led to his conviction. A dangerous and wicked man was taken out of circulation for a very long time. The Home Office must have the balance very much in mind when considering those issues.
The voluntary retention of DNA profiles on a separate database is already under consideration in a wider review of the legislation in the Police and Criminal Evidence Act 1984 relating to fingerprints and samples to ensure that it reflects recent technological advances. That is something on which I can give the hon. Gentleman some assurance— I think that he was about to raise that matter. We are considering the voluntary retention of DNA profiles, on a separate database, in the context of a wider review of the legislation as it relates to fingerprints and samples.
The current database is expanding rapidly and was designed to hold up to 5 million profiles. Although PACE enables samples to be taken from anyone suspected, charged or convicted of a recordable offence, the police currently restrict themselves to taking samples only in cases of burglary, sexual or violent offences. That represents the best use of resources by focusing on cases where DNA evidence is most likely to be of value.

Mr. Webb: The Minister raised an option that I had not thought of—the retention of the samples on a separate database. Can he give some idea of the time scale in which the review of PACE might be concluded?

Mr. Boateng: The review is under way. We are balancing the issues that I described and, in due course, we shall arrive at conclusions. Our concern is to make available the best and most robust basis for the successful detection and prevention of crime, so we are proceeding with all due expedition—of that, the hon. Gentleman can be sure.
The establishment of a truly national DNA database for the population as whole raises fundamental questions. There is a strong analogy with fingerprints, which uniquely identify individuals, but we do not require every individual to have their fingerprints on record. One could argue that that would be useful, but we do not do it for reasons that the hon. Gentleman will understand.
Therefore, before we take any step towards establishing a national database, we need to consider carefully the balance of the rights of the individual and its desirability and practicality. Although developments in the technologies required and the ability to search large databases mean that such a database is becoming technically feasible, the concept still raises fundamental questions, such as the balance of individual rights and the cost, which need to be addressed.
However, the Forensic Science Service is working closely with the police service, to develop a joint strategy with the Association of Chief Police Officers, to realise


fully the potential of forensic science to support criminal investigation and the detection and reduction of crime. Increasingly sensitive techniques are being developed to allow DNA profiles to be extracted from small crime stains, enhancing the ability of the police to bring criminals to justice. We are committed to taking all steps necessary and making the best use of new technologies to that end.
This has been a useful debate. It has given the House the opportunity to express its determination to ensure that we develop new technologies in a way that will benefit the police and the detection and reduction of crime. The care and concern that the family of Louise Smith have taken subsequent to her tragic death to be supportive of the police and mindful of the importance of gathering public support behind the steps that need to be taken to develop to the maximum the new technologies are to be commended. They have performed a great service by raising the profile of the issue with the public, not least in collecting the 9,000 signatures to which the hon. Gentleman referred.
Ultimately, if there is to be a change in legislation, it will need to be supported by the public. It will also need to be seen to be supportable in terms of the balance of civil liberties and the rights and interests of all concerned and of a sufficiently large number of people volunteering to allow samples to be retained to make it meaningful— as the hon. Gentleman will appreciate, were the number to fall below a certain critical mass, the value of the exercise would be destroyed.
Therefore, it has been enormously valuable that the family of Louise Smith have raised the issue as they have. The hon. Gentleman has also done the House a service in bringing the matter before us. I look forward to meeting the family to express in person my appreciation of what they have done. The case in question highlights the benefits of DNA evidence. It also highlights the importance of using the best and most readily available technologies to that end and the importance of intelligence expertise in the analysis of crime in the hands of our dedicated police service as a way to identify where and how such techniques might be used. The fact that Louise Smith's murderer was brought to justice stands as a tribute to the police and the public.
We began with Louise's case and it is right that we should end with it. We should all express a determination to ensure that her tragic death and the loss that her family suffered is something from which we can draw lessons to prevent the loss of other lives, with all that that would entail for other families. The House will wish to join me again in expressing my deepest condolences to Louise's family.

Heathrow

Mr. Tony Colman: I start by thanking Madam Speaker—through you, Mr. Deputy Speaker—for allowing this Adjournment debate on night flights into Heathrow, which is a subject that is near to the hearts of all those in the Thames valley and perhaps also now to Madam Speaker.
Two thirds of a million people suffer directly under the flight path from night flights into Heathrow, but I shall choose just one constituent, whose letter reads:
I have been living in Putney for the last two years and it is only recently that my husband and I seem to have been woken up at early hours in the morning with the noise of planes. They have become extremely infuriating and indeed very stressful. Over the recent Bank Holiday weekend I was woken up early at 4.20 am by a plane and they seemed to be coming in by the minute. In my sleepy state I made notes of the times they came in. The first was 4.20 am and then a succession at 4.21 am, 4.22 am, 4.30 am, 4.34 am and 4.35 am. I have been woken up many times with these early morning flights in the last two months. Isn't this the time when a person is in their deepest sleep? Perhaps because it has been so hot we have had the windows open wider whereas before it may have been possible we did not hear them as clearly because we had the windows closed. What are we expected to do—not breathe? What I would like to know is where in the world are planes allowed to fly over residential areas from 4.00 am onwards? I would greatly appreciate an answer to this question.
I am rather ignorant at this stage as to who the Chairman of the BAA actually is or the parties involved. I wonder if you could provide their names and addresses. I would like to go and park my car outside their homes at 4.00 am every morning, and blow my horn. I wonder how they might feel?
I am not suggesting that my constituents should do that, but it shows the strength of feeling of law-abiding citizens.
The second stage of the Government consultation has just closed and the timing of this debate is to ensure that the Minister has a chance to hear what is being said unanimously by the people and their Members of Parliament who live in the afflicted area: "No more night flights."
The first stages of the consultation clearly emphasised that view. Only the airline industry wants the status quo— or worse. As a representative of the people of the Thames valley, I must ask the Department of the Environment, Transport and the Regions to represent the people, not the industry. The curfew requested by HACAN of 11.30 pm to 6 am seems eminently sensible, and I proposed it in my Adjournment debate of 28 October 1997.
The second stage consultation document of November 1998 asked for ways to deal specifically with noise from Heathrow night flights. Regrettably, its proposals would merely share the noise around the area. However, for my constituents' sake, I must back the idea of moving towards an easterly preference for landing. That would mean landing from over Windsor and to the south of Windsor wherever possible. I propose that runway alternation should be used to share the noise damage further.
The hon. Member for Windsor (Mr. Trend) established in his Adjournment debate on 24 July 1998 that the Cranford agreement does not exist, and that the northern runway can be used as well as the southern one. I understand that BAA has no problem with the easterly preference or with runway alternation. A decision on that rests, of course, with my hon. Friend the Minister for Transport in London.
I suggest that alternation should cease between 6 am and 7 am to allow both runways to be used to take flights arriving after the curfew from 11.30 am to 6 am that I have also suggested. The hon. Member for Windsor argued in his Adjournment debate for retention of the status quo, which would protect his constituents and the people of east Berkshire. The hon. Member for Maidenhead (Mrs. May), who cannot be here today, has asked me to make it clear that she, too, supports the status quo.
I must point out, however, that 580,000 people suffer from the westerly preference because they live directly under the approach path, and much larger numbers are also affected. Some 64,000 suffer from the easterly preference. Those figures come from the House of Commons Library. Clearly, my suggested changes would share the damage more equitably.
However, part one of the consultation document and its appendices contain the crucial argument for why night flights must continue. It is the economic argument that if flights were banned, they would go elsewhere in Europe. The pre-eminence of Heathrow—the busiest airport in Europe—would be undermined, and there could be job losses.
My hon. Friend the Minister made that case in her responses both to me in 1997 and to the hon. Member for Windsor in 1998. The airlines do not want to change their schedules. However, another Putney resident wrote to me:
British Airways has four flights from the Far East landing between 04.55 and 05.35. I know from my own experience that these overnight flights are very convenient and that later landings would require take-offs well after midnight in the Far East. This should not be a problem with the new Hong Kong airport or Australasian flights refuelling there. These early morning landings should only be allowed into Stansted, thus stimulating connecting flights from there.

Mr. Philip Hammond: Does the hon. Gentleman agree that one argument advanced by the airlines for early morning arrivals is the lack of terminal space a little later in the morning, which makes it difficult to unload large aircraft that arrive after 6 am? Does he agree that if terminal 5 went ahead, one of the major arguments offered by the airlines to support continuing early morning arrivals would disappear?

Mr. Colman: I am interested in that point, which I have not heard before. When I returned recently from the United States on an early morning flight, I was put on an isolated stand and bussed back to the terminal, so I do not believe that that is a problem. More isolated stands could be used after 6 am.
My constituent's letter continues:
British Airways also has five flights from the eastern USA landing between 05.35 and 07.00. Flights from New York are scheduled at 7 hours. From my experience"—
and from my own—
of flying this route, the jetstream can reduce this to as little as 5 hours, making the landing times even earlier. Later evening flights out of the East Coast"—
from, say, 9 pm onwards—
would be advantageous to passengers in avoiding rush hour traffic, take-off congestion and a more natural time to go to sleep.
Clearly there are answers to the problem of re-scheduling night flights, if the airlines wish to apply them.
Appendix E of the consultation document notes the night restrictions at foreign airports, and that seems to be the nub of the economic argument. If Heathrow closes at night, and if there is no ban on night flights into Paris Charles de Gaulle, Amsterdam Schipol or Frankfurt-am-Main—as at present—Heathrow will lose out. The argument is, therefore, that Heathrow must have its night flights.
May I ask the Government to take up the matter with our European Union partners at the next intergovernmental meeting, and to seek a ban on night flights across Europe? I cannot believe that that is impossible to achieve. We are truly in a zero-sum game: if no European airport will accept flights during the night, no single airport will suffer. I note from appendix E that Tokyo Narita airport and Sydney airport close to all traffic through the night from 11 pm to 6 am. It can be done.
I pray in aid two further points. First, as long ago as 1995, the European Parliament in resolution A4–0012/95, section 5b, called for
harmonisation and strengthening of legislation governing aircraft noise in areas adjacent to airports, including legislation on night flights.
Secondly, the draft manifesto for the European elections of the Party of European Socialists was agreed in Milan last week, and commitment 11—"Ensuring a Health Environment"—states that
pollution does not respect national boundaries. We can only deliver a sound environment if we work together to raise common standards.
I appreciate that change will take time, so I have various suggestions for action while we await a pan-European ban as the outcome of the second consultation. First, I suggest an immediate ban on night flights from 11.30 pm to 4 am to reflect current unspoken practice, and to establish a principle in favour of a ban using the powers of my hon. Friend the Minister under section 78(3)(b) of the Civil Aviation Act 1982.
Secondly, I suggest a change in the time period for all other restrictions, to run from October 1999 to October 2000—not October 2004—to enable time for a European night flight ban to be agreed by the new European Parliament and the Council of Ministers. Thirdly, I suggest that the night-time ban could come into effect across Europe—including Heathrow—in October 2000. It would be a fitting symbol of the millennium, putting people ahead of a spurious zero-sum game of economic interests.
I commend my proposals to the Minister. I do not expect an immediate reply, but I hope that they may provide a basis for the decision that the Government will take on the future of night flights into Heathrow.

The Minister for Transport in London (Ms Glenda Jackson): I congratulate my hon. Friend the Member for Putney (Mr. Colman) on securing this debate on an important issue that has occupied this House on two recent occasions—on 24 July last year in a debate initiated by the hon. Member for Windsor (Mr. Trend), who is in his place, and before that on 28 October 1997, in a debate initiated by my hon. Friend the Member for Putney when we considered day-time and night-time noise.
The main issue at night is of course interference with sleep and the distress and annoyance that can cause, which is a problem not only for the constituents of my


hon. Friend the Member for Putney, but for thousands of people who live around Heathrow and under its principal flight paths. Heathrow, of course, is not unique in that respect. My hon. Friend referred to the Government's two-stage consultation on future night restrictions at Heathrow, Gatwick and Stansted airports. Our aim has been to make consultation as open and accessible as possible, and for that reason we decided to proceed in two stages.
The preliminary consultation paper issued in February last year sought views on all aspects of the present regime introduced in 1993, including the underlying principles. After careful consideration of all the responses, on 10 September last year I decided that the movement limits and noise quotas for the three airports for summer 1999 should be the same as they were for summer 1998. In November we issued a second consultation paper inviting comments on the Government's proposals for future restrictions at Heathrow, Gatwick and Stansted, to ran from 31 October 1999 for five years until the end of the summer season in 2004.
As my hon. Friend the Member for Putney said, the second consultation paper also considers a range of options for changes to the preferential use of Heathrow's runways at night, which follows up on the trials of night-time runway alternation. The Government have not reached any view on the many options outlined in the second consultation paper, but we believe it right that those issues should be examined thoroughly before any decision is made.
The closing date for the second consultation paper was 12 February 1999, and the process of logging the many responses and studying them is under way. I am sure that my hon. Friend the Member for Putney and the House will understand that I cannot comment today on the responses we have received or on the decisions we may reach in the light of them.
Night flights have never been banned at Heathrow. Restrictions were introduced in 1962 in recognition of the disturbance caused to local people by the first generation of jet aircraft. Those very noisy aircraft have long since been banned from United Kingdom and other European airports and the process of phasing out the second generation of jets certificated to ICAO Chapter 2 standards is well under way and will be complete by the end of March 2002. In setting restrictions on night flights, successive Governments have sought to strike a balance between the impact such flights can have on people living around airports and the need for airlines to operate services at night, taking account of the user and the economic benefits they bring.

Mr. Hammond: I recognise the Minister's arguments about the economic benefits of night flights, but may I suggest a way in which we might reduce the problem a little without any serious economic impact? The hon. Member for Putney (Mr. Colman) mentioned the earlier than scheduled arrival of flights, especially from the USA, as one of the problems that contributes to early morning disturbance. I understand that flights arriving early are required by Civil Aviation Authority regulations to land immediately. The airline does not have the option of holding that flight away from the airport so that it lands

at the scheduled time which is, after all, the time that the passengers expect to arrive. It does them no good to be dumped on the ground up to two hours early.
Will the Minister consult the CAA to see whether it is possible to change the guidance so that early arriving aircraft could be held, perhaps over the Bay of Biscay or somewhere convenient, so that they arrive after the curfew deadline and do not contribute to the noise nuisance?

Ms Jackson: The hon. Gentleman makes an interesting proposal. As a nervous flier, the idea of going round and round the Bay of Biscay for two hours before my aeroplane was allowed to land at Heathrow, after a long international flight, fills me with horror. I will consider the hon. Gentleman's request, but his proposal could lead to gross unfairness. Many aircraft arrive early due to conditions over which no one has any control—not least the winds—and that could cause difficulties.

Mr. Colman: The concept of planes circling over the Bay of Biscay also fills me with horror, but my hon. Friend the Minister might wish to consider a slightly different proposal. When flight plans are logged at, for example, Kennedy airport in New York, and they show that the flight will take five hours, not seven hours, the plane could be held on the ground for two hours to ensure that it makes the time at which it is due to arrive. That could perhaps be achieved through co-operation.

Ms Jackson: As I am sure my hon. Friend is aware, I have no jurisdiction over the flight plans at Kennedy airport. The USA is an independent, sovereign state. I can examine the issue, but I have no jurisdiction in the area.
The present restrictions specify a night period, 11 pm to 7 am, during which time the noisiest aircraft may not be scheduled to land or take off. In addition, from 11.30 pm to 6 am, the night quota period, aircraft movements are restricted by a movements limit and a noise quota. The noise quota is a supplementary measure designed to encourage the use of quieter aircraft. Aircraft count against the noise quota according to their quota count— or QC—classification, with the noisier the aircraft, the higher its QC. The movements limits and noise quotas are set for the season as a whole: they are not sub-divided across the hours of the night or between types of services, and airlines may operate services as they wish within the limits and quota available.
The Government's main objectives in carrying out the current review of the night restrictions are, first, to strike a balance between the need to protect local communities from excessive aircraft noise levels at night and to provide for air services to operate at night where they benefit the local, regional and national economy.
We recognise that local environmental expectations may be changing, as may the commercial interests of the airlines. Our second objective is to take account of the competitive factors affecting UK airports and airlines. Our third objective is to take account of the research into the relationship between aircraft noise and interference with sleep, including any health effects, and the fourth is to safeguard improvements in the noise climate in the night quota period since 1993, which we are proposing to do by reducing the noise quotas to nearer the level of current usage. The fifth objective is to encourage the use of quieter aircraft at night, and the sixth is to put in place at


Heathrow and Gatwick arrangements which will bring about further improvements in the night noise climate around the airports over time.
In pursuing the last two objectives, it has not been possible in the Government's proposals for Heathrow to make as much progress as we would have wished. Most aircraft using Heathrow are already modern types with many years of service ahead of them and, of course, there are tight constraints on runway and terminal capacity at the south-east airports.
It is not possible in the time available to cover all aspects of the Government's many and detailed proposals contained in the second stage consultation paper. However, among the main ones relating to Heathrow are proposals to maintain the QC system and seasonal movement limits supplemented by noise quotas; to reduce the seasonal noise quotas for Heathrow to nearer the level of current usage in order to safeguard the improvements in the noise climate in the night quota period since 1993; subject to the proposed review of the QC system, to ban aircraft classified QC4 from being scheduled to land or take off during the night quota period from the start of the 2002 summer season; to extend the restrictions on very noisy aircraft classified as QC8 to match those already in place for the noisiest types classified as QC16; and to reduce end-of-season flexibility by half. However, it is not proposed to introduce a complete ban on night flights as that would fail in our objective of striking a balance.
Aircraft noise at night and during the day remains a contentious subject. We freely acknowledge that. Unfortunately, despite the great improvements made over the past 30 years, it is likely to remain so. I announced on 27 February last year that we are commissioning a research trial into the impact of aircraft noise at night. We are particularly interested in the scope for research into sleep prevention: that is, delay in getting to sleep at night and the difficulties of not being able to get back to sleep after being awakened in the early morning—a problem mentioned by my hon. Friend as being the experience of his constituents. However, we should not underestimate the complexities of such research, or the length of time it may take.
The difficulties of scheduling intercontinental services is a significant factor in the present pattern of early morning arrivals at Heathrow. The night curfew at Hong Kong's former airport Kai Tak was often said to contribute to that, but it was far from being the only or the most important reason. We do not expect the pattern of movements to change radically now that Hong Kong's new airport at Chek Lap Kok has opened. Such services and similar ones cross many time zones, which limits their scheduling window for making suitable connections with other services. In addition, many services are now able to complete their journey non-stop owing to technological improvements and shorter routings, which means that they arrive earlier. There are now few departures from Heathrow during the night quota period, but some that take off just before our restrictions begin land at sensitive times at other international airports as a result.
In his own inimitable way, my hon. Friend referred to the fact that other comparable European airports have tougher night restrictions, but that is usually not the case at European countries' principal international airports— indeed, most have less severe restrictions and few have any restrictions at all on the number of chapter 3 aircraft

that may operate at night, as we have at Heathrow, Gatwick and Stansted. In addition, most European cities are one hour ahead of London—an advantage that might go some way to explain why there is little interest in Europe in establishing common standards for night restrictions. In respect of my hon. Friend's interesting suggestion regarding the European Parliament, it is unlikely that an agreement of that sort could be achieved in less than 12 months.
My hon. Friend focused on aircraft landing at Heathrow in the early morning, from 4 am onwards and sometimes earlier. That is understandable, given that such flights now constitute the substantial majority of night flights at Heathrow. They fly over Putney and neighbouring areas when the wind is from the west, and over Windsor and adjoining areas when the wind is from the east. Internationally agreed standards and safe operating practice require that landing aircraft follow a stable straight-in descent aligned with the runway, which precludes dispersal of noise once aircraft are established on the airport's instrument landing system, normally at a distance of between 8 and 16 nautical miles and between 10 and 20 nautical miles at night.
My hon. Friend is aware of and referred to the trial of runway alternation at night for landing aircraft carried out by BAA for the Heathrow airport consultative committee. The results were summarised in our second consultation paper. The survey of local opinion organised by HACC indicated that there was a balance of opinion in favour of the procedure's introduction on a continuous basis. The Government have invited further views from the wider area likely to be affected, and opinions on some of the practical difficulties of applying it during the hour from 6 am to 7 am.
We have also asked for views on the operation of the 5-knot westerly preference at night, which has caused concern for people living to the west of Heathrow. Westerly preference is a noise amelioration procedure introduced in the 1960s to reduce the number of aircraft taking off over the more densely populated areas to the east of the airport. It is generally recognised to be an effective noise amelioration measure during the day, but because the pattern of night flights has changed since the 1960s and there are seldom take-offs between 11.30 pm and 6 am, but more landings between 4 am and 6 am, maintaining the procedure at night might now be having the opposite effect of increasing overflight of the most densely populated areas east of the airport.
The Government consider it necessary to review the use of that procedure at night, as well as the related issue of night-time runway alternation. However, the Government have not formed any view on the matter; at this stage, we do not favour any one option over another, including the status quo. All responses will be taken into account, including views on which options would provide the greatest benefits overall, which would provide the greatest improvements over the current arrangements, and what would be fair and equitable, taking account of operations during the day as well as at night.

Mr. Michael Trend: The Minister speaks of possible improvements. I listened with great respect to the hon. Member for Putney (Mr. Colman), who spoke well on behalf of his constituents. Governments have the power to inflict misery on or bring benefits to the people of this country, but this is not a simple numbers game, or a question of west London versus east Berkshire.
Benefits might accrue from any change in the night flight regime, but they would be far outweighed in the balance by the certain misery that would be visited on the people of east Berkshire. The Minister will not be surprised to learn that I remain implacably opposed to any change whatsoever. Because the people of east Berkshire have always had the worst of the take-offs, now that the balance has changed it would be wrong to change the balance of misery and benefit between the two communities. The effect on us would be so much worse and far outweigh any possible benefit that might be achieved in west London.

Ms Jackson: The hon. Gentleman makes the argument on behalf of his constituents—a duty which he has fulfilled with persistence and dedication. I congratulate him on that, but I am sure that he accepts that it would be totally improper for any Government to enter into a wide-ranging consultation process on the issues before us, but to fail to take into consideration the responses to that consultation document. We shall fairly and intensively scrutinise all the responses we received.
My hon. Friend the Member for Putney referred to the commercial aspects of the area we are debating. It is undoubtedly true that Heathrow airport is a major national asset. It occupies a position of central importance in international trade and communications in Europe and in the UK economy. It is the busiest airport in Europe and

the busiest international airport in the world: in 1998, it handled 60 million passengers, 35 per cent. of whom used the airport as an interchange point. It is currently used by more than 90 airlines serving 200 destinations world wide; and it is the UK's largest port in terms of value of trade handled. It provides 57,000 jobs directly and a further 25,000 indirectly in support services; those jobs benefit all those who live around the airport and contribute to the prosperity of the country as a whole.
People living near Heathrow, Gatwick and Stansted want to enjoy reasonably quiet nights. Successive Governments have consistently recognised the need to ensure that people living near those airports are not exposed to excessive numbers of aircraft at night. The current Government also recognise that need, believing it both right and necessary to set restrictions on night flights at those airports and, in so doing, preserve a balance between environmental, aviation and economic interests while taking account of changes in public expectations and in the commercial needs of airlines.
I thank my hon. Friend the Member for Putney and all those who have participated in the debate for giving the House the opportunity this afternoon to consider the issues and, in conjunction with all the responses we have received to the consultation, helping the Government to reach decisions on those difficult and complex issues.

It being before Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o 'clock.

Oral Answers to Questions — INTERNATIONAL DEVELOPMENT

The Secretary of State was asked—

Education Projects

Mr. Peter L. Pike: What percentage of resources her Department targeted on educational projects in the last year for which figures are available. [73829]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): One of the key international poverty eradication targets is to secure primary education for all children in the world by 2015. Education is therefore of crucial importance in the work of our Department. In 1997, we spent 11 per cent. of our bilateral programme on education. Our contributions to the European Community and other multilateral organisations also supported their education programmes. We will publish an education policy paper later this year.

Mr. Pike: My hon. Friend will recognise that basic education plays a crucial role in ending the cycle of poverty. He will also recall that a world conference in Thailand nine years ago set a target of achieving basic education for all the children of the world within 10 years. Yet 125 million children of primary school age do not currently receive any education. Does my hon. Friend think that other Governments share our belief that we should do much more to try to end the cycle of poverty and get children educated?

Mr. Foulkes: I am grateful to my hon. Friend. He is right to say that the targets were agreed internationally at United Nations conferences, and some Governments, such as ours, have signed up to them. As we set out in our White Paper, the Government have adopted those targets within our programme and we are encouraging not just other Governments but international organisations to sign up to them in an attempt to achieve universal primary education by 2015.

Dr. Jenny Tonge: Are the Minister and the Secretary of State aware that this week's Comic Relief campaign supports education projects in Uganda and Kenya that are delivering primary education to girls— in particular, in Uganda and to the nomadic peoples of Kenya? Will they consider joining hon. Members on College green at 3.45 pm this afternoon for the Comic Relief parliamentary red nose day photo call?

Mr. Foulkes: Some people have suggested to me that I do not need an artificial red nose. I had the pleasure of chairing a meeting this morning at which Tony Robinson was a participant. We strongly support the work of Comic Relief. The Secretary of State and the Chancellor of the Exchequer have met organisers on several occasions, and we are grateful for the way in which they highlight the kind of work in which we are involved. Uganda is one of our biggest programmes: we have committed £67 million to education in that country. We therefore agree with everything that the hon. Lady has said.

Debt Relief

Mr. Win Griffiths: If she will make a statement about the development of anti-poverty programmes in poor countries arising from the availability of resources from international debt relief. [73830]

The Secretary of State for International Development (Clare Short): Debt relief provided under the heavily indebted poor countries initiative has substantially reduced the debt owed by poor countries. However, because only a small proportion of the debt was being serviced previously, there has been comparatively little effect on Government budgets—particularly on the ability to spend on anti-poverty programmes.
Faster and deeper debt relief is required to tackle poverty effectively. The Chancellor of the Exchequer and I have proposed increasing the level of debt cancellation to $50 billion by 2000 and ensuring that the money released from debt service payments is used for poverty reduction purposes. We will seek support for those proposals at the International Monetary Fund-World bank meeting in April and at the G8 summit in June.

Mr. Griffiths: I thank my right hon. Friend for that very positive reply. In that connection, will it be possible to take on programmes such as the Uganda poverty action programme and give further concessions to heavily indebted countries that can show that 85 per cent. or more of their debt relief will be used for poverty reduction programmes? That would allow other targets, such as reducing absolute poverty by half and infant mortality by two-thirds, to be accomplished by 2015.

Clare Short: I absolutely share my hon. Friend's objective. Uganda was the first country to receive debt relief under the HIPC initiative and had a considerable write-down of debt, but because the formula is based on the ratio of export earnings to debt and because coffee prices fell, the country is no better off. Although the debt relief helps Uganda's commercial reputation, it has not helped the Government to spend on poverty. The review that we agreed with the IMF and the World bank will try to sharpen the connection to poverty programmes and provide deeper debt relief if there will be a benefit to those programmes, which is what my hon. Friend is asking.

Sir Sydney Chapman: I very much commend and support the Government's initiatives, which follow those of the previous Government, in trying to tackle debt in the poorest countries. Will the right hon. Lady confirm that one problem is that much of the debt is serviced by financial institutions which, in turn, have creditors, and that that must be sorted out? Even if that problem is solved, it would, to a certain degree, dissuade creditors from supporting anti-poverty programmes in future.

Clare Short: There are some 40 countries in the HIPC initiative for the very poorest countries. Their present debt is not commercial: if they ever had commercial debt, it has been written off because banks do not want to carry non-performing debt for a long time. Their debt includes debt to export credit agencies of Governments, and in countries other than our own, aid debt—we have already


written off all ours—and debt to the World bank and the IMF. In the past, the World bank and the IMF never wrote off debt; this is the first time, which is why they are determined—and we agree—that it should be done responsibly so that Governments do not take on new wasteful contracts and get into a mess again.
The Paris Club deals with the export credit debt, and has in the past agreed to write off up to 67 per cent. of that, often for commercial reasons so that new contracts can be made. Under HIPC, that write-off increases to 80 per cent. The hon. Gentleman's point is important because sometimes the aim of debt relief is to get new contracts. That will not help the poor. We want to manage debt relief so that it is conditional on Governments spending the proceeds on better programmes for the poor.

Mr. Denis MacShane: If she will take steps to require that debt relief for developing countries is conditional on (a) respect for human rights, (b) promotion of democracy and (c) a reduction of expenditure on weapons. [73831]

The Secretary of State for International Development (Clare Short): Debt relief under the heavily indebted poor countries initiative is conditional on the countries adhering to a reform programme agreed with the International Monetary Fund. We have been working since May 1997 to ensure that IMF programmes in developing countries focus more clearly on poverty reduction and defence expenditure at an appropriate scale. The current review of HIPC, which we got agreed at the previous World bank and IMF meeting, encourages more respect for the human rights of the poor. Democratic and accountable government is essential for the promotion of development.

Mr. MacShane: I am grateful to the Secretary of State. She answered my question to my complete satisfaction, so with your permission, Madam Speaker, I shall sit down.

Mr. Gary Streeter: Sadly, I cannot do the same, but I support the Secretary of State's recent comments on debt relief and congratulate her on those. Does she agree that Nigeria, which is home to one fifth of all black Africans, has a crippling debt burden of roughly $30 billion and has taken huge strides towards democracy in the past six months, is now a high priority for urgent and substantial debt relief by the donor community?

Clare Short: I agree with the hon. Gentleman that the changes in Nigeria are fantastically good news and will allow it to re-enter the democratic community. It faces very great problems. The growth of poverty means that Nigeria—which should, with all its oil wealth, be a wealthy country—probably has a GDP of only $200 a head, so it is a very poor country. It is massively indebted and does not even know at present how much its debt is. We are providing support to help Nigeria to work out how much debt it has. The whole international community will then have to try to help Nigeria to have good-quality Government and to squeeze corruption, which is terribly bad, out of the system. I agree with the hon. Gentleman that we have to help Nigeria, but we cannot provide unconditional debt relief. That must be part of the reform process that helps the poor and deals with corruption.

Mr. Streeter: I agree with much of what the Secretary of State said, but may I urge her to go further?

If President-elect Obasanjo does commit himself to anti-corruption measures and good governance, does the Secretary of State agree that because of our historic links with Nigeria, we have a vital role to play in pressing the case for multilateral debt relief in the international community? Will she undertake to play a leadership role, so that when the new Government take over in May, 120 million Nigerians can be given a fresh start and a new chance?

Clare Short: I said that I agreed with the hon. Gentleman that we must help Nigeria, but it would not help the people of Nigeria if debt relief were given too easily, without the proper reforms and without dealing with corruption. The problem of corruption in Nigeria is very bad. It is entrenched throughout the system. We must help the best forces in Nigeria to reform the country so that it gets efficient governance. Debt relief will be part of that, but it must be conditional on progress in dealing with corruption.

Mr. Dennis Skinner: Has my right hon. Friend considered the problem that arose during the period of the Tory Government, when debt relief resulted in the top four clearing banks—NatWest, Lloyds, Barclays and the Midland—getting about £5 billion to set off against so-called irrecoverable debts? We all support the idea of debt relief. Can she do it without lining the pockets of those at the top four clearing banks?

Clare Short: My hon. Friend makes his own point. I know that in the past he has spoken expertly on debt relief in the context of the commercial banks. The World bank and the IMF are public institutions, not private ones. Export credit guarantees are Government insurance for private sector contracts. Sometimes the private sector unwisely pushes contracts on Governments which they cannot afford, and the public sector ends up bailing out. When we deal with debt relief to get countries going again, we should look at what kind of projects are getting export credit guarantees, and make sure that things are done more sensibly.

Mr. Cynog Dafis: The conditions that have been mentioned are important, but is it not also important that there should not be double standards? For example, is it not the case that the United Kingdom exports significant quantities of arms to Turkey, and that a large part of those arms are used in the terrible repression of the Kurds? Does not Turkey have an appalling record on human rights? Should not the standards that the Secretary of State mentioned apply equally everywhere, in developing as well as in developed countries?

Clare Short: We do not have a development programme in Turkey, so I have no part in objecting to arms licences for Turkey. The hon. Gentleman may be right; he may be wrong. I do not know whether Britain is selling large-scale arms to Turkey. We need to get international agreement to more stringent rules for arms sales, and be much tougher on sales to developing countries that cannot afford large-scale arms purchases. I agree with the hon. Gentleman on that, but I am sorry, I have no detailed knowledge of Turkey.

Zimbabwe

Mr. Robert Syms: If she will make a statement on the future of the assistance programme for Zimbabwe. [73832]

The Secretary of State for International Development (Clare Short): We are reviewing all our bilateral programmes in order to implement our White Paper priorities. For the first time, the Government are publishing these programmes, following a period of consultation. Our country strategy paper for Zimbabwe will be published shortly. The strategy will focus on reducing poverty in Zimbabwe which, as the hon. Gentleman probably knows, is increasing desperately. Copies of the Zimbabwe paper, like all our country strategies, will be placed in the Library of the House.

Mr. Syms: Does not the Secretary of State consider Robert Mugabe's attempts to take over some of the most productive land and farms in Zimbabwe to be economically damaging and a form of political bullying, and not very new Labour either? Should we not consider shifting our aid to countries in Africa that are pursuing more sensible economic policies?

Clare Short: We have discussed the matter in the House on a number of occasions. I have always made it clear that we are extremely worried by many of the things that are taking place in Zimbabwe and many of the Government's actions. However, we do not consider it right to close down programmes that bring direct benefits to poor people in Zimbabwe because the Government's behaviour is undesirable.
We believe, as does the farmers association in Zimbabwe, that there is a strong case for land redistribution, but it must be done properly and transparently, so that poor farmers get a chance to farm and their children can go to school, and the land should not be redistributed to those who find favour with the Government. We and other donors have joined together and said that we will not support any land redistribution unless it is done properly and transparently, in a way that will bring benefits to the poor.

Mr. Tom Clarke: Does my right hon. Friend agree that, whatever repugnance we may feel about Robert Mugabe's regime, with its unnecessary war, its human rights record and its treatment of its own people, it is none the less right for the international community to recognise humanitarian problems, such as infant mortality, child malnutrition and the need for fresh water? Does she further agree that the people of Zimbabwe should not be punished for the folly of then-own leadership?

Clare Short: I agree with my right hon. Friend, who draws attention to a constant dilemma in our development work: we want good Governments to work with, but what do we do when some of the poorest and most oppressed people of the world are living under bad Governments? We cannot turn our back on them. We have to try to find ways of bringing some relief and change in their country so that they get good government. Zimbabwe is a highly educated country with great natural resources and there is no reason why it should not be doing very well

economically, so some of the recent failures of governance are a great tragedy. I refer in particular to the fact that one in four adults in Zimbabwe has HIV: the 20-year gain in life expectancy brought by development has been wiped out by the decimation brought by HIV.

Mr. John Bercow: I respect the right hon. Lady's humanitarian motives and I accept the importance of trying to protect that aid which is directly related to the relief of poverty and hardship, but does she accept that it is important to identify a specific mechanism by which that anti-democratic Government can be punished, at a time when it is pursuing an irresponsible and adventurous foreign policy and when people in the capital are rioting against corruption and incompetence? Can she identify a specific mechanism to punish the President, not the people?

Clare Short: That problem arises in Zimbabwe and many other countries. The hon. Gentleman is right that, in the past, too much aid went unconditionally to Governments who were not interested in reform. Such money is simply wasted and does not benefit the poor. Therefore, in all our programmes, we want to back reforming Governments. Where there is no reforming Government we look for ways in which to bring some assistance to the neediest people, but there will be no major development in such a country. We try to use our influence in that way throughout the world. But, wherever possible, we try to encourage Governments to be reformers, not just to put ourselves in a comfortable position, but to try to achieve change that will bring benefits to the people.

EU Enlargement

Mr. Andrew Mackinlay: What assistance she will provide to the five central European, first-wave, EU applicant states in the period between the reduction of the know-how funding provided to them and their accession to full membership of the EU. [73833]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): We shall continue to provide substantial support for the states that are seeking membership of the EU, principally through multilateral channels, particularly the European Union. From 2000, EU funds to support accession will total more than £2 billion per year. The British share of that will be approximately £300 million.

Mr. Mackinlay: I welcome what my hon. Friend says, but my question concerned the know-how fund, which is moving eastward. I urge my hon. Friend to reconsider the position because the know-how fund is a gilt-edged investment for the UK in terms of good will. In addition, the UK can make a unique contribution to those countries seeking to achieve the acquis in time for their accession to the EU, but only through the know-how fund.

Mr. Foulkes: I suppose that it would have been a bit optimistic of me to think that my hon. Friend would follow the example of my hon. Friend the Member for Rotherham (Mr. MacShane).
We recognise that we can provide a great deal though the know-how fund, but substantial sums can and should be provided from the EU, through PHARE—Poland and


Hungary Aid for Reconstruction of the Economy—the European Bank for Reconstruction and Development and the European investment bank. From next year, an extra £1 billion will be available through the pre-accession instrument for structural policy and the special accession programme for agricultural and rural development— typical EU titles, I am afraid. Therefore, substantial sums are going. I hope that my hon. Friend will recognise, further to earlier questions, that it is vital to achieve the targets for poverty eradication by 2015, and we must not take our eye off that important target.

Mrs. Cheryl Gillan: The Minister knows that there is no danger of my following the example of the hon. Member for Rotherham (Mr. MacShane).
The Minister will agree that it is becoming apparent that the successful accession of the central European applicant states requires even more assistance than was at first envisaged. The average wage in the United Kingdom is seven to 10 times more than that in the five first-wave countries, so does he agree that there is potential for vast economic migration? Despite his announcement of £2 billion-worth of substantial support, what specific proposals has he to reduce that gap and the poverty levels in the five former communist countries? We must ensure the success of enlargement, which hon. Members in all parts of the House want to achieve.

Mr. Foulkes: The hon. Lady would be the first to recognise that Britain has made an acknowledged contribution to supporting transition. It is remarkable that, partly with our help, five countries that were communist only a decade ago are negotiating to join the European Union. That is a tremendous step forward. Our policy is to support those countries, particularly those experiencing the social effects of transition, which can be very difficult, especially in relation to unemployment. We are moving our support in that direction to ensure that they are ready to become full members of the European Union.

EU Development Aid

Mr. John Wilkinson: When she last met the EU Commissioner for overseas development aid to discuss the priorities of the EU development aid programme. [73834]

Mr. James Gray: What steps she will take to ensure value for money in the EU aid budget. [73837]

Mr. Tom Levitt: What action her Department is taking to ensure that a greater proportion of EU development assistance is allocated to the least developed countries. [73841]

The Secretary of State for International Development (Clare Short): I met Commissioner Pinheiro at a ministerial meeting in Dakar on 8 and 9 February to discuss successor arrangements to the Lomé convention. I had wider discussions on the EU's development efforts—including value for money and redirecting resources to the poorest countries—with Commissioners Pinheiro and Bonino and my EU colleagues at the Development Council in November.

I gave them a clear chart showing how distorted current spending is. I expect to see most of them again in Berlin next week. I am doing everything in my power at all such meetings to achieve a commitment to more effective EU development programmes that are focused much more on the poorest countries.

Mr. Wilkinson: Did the right hon. Lady give Commissioner Pinheiro a copy of the first report of the Select Committee on International Development on the future of the EC development budget? The report states quite clearly that
the Commission has no intention of allowing 'the war against poverty to figure among the top priorities of international relations.'
Is it not disgraceful that the European Union should be the vehicle for so much of our external assistance when it disburses only 41 per cent. of the external assistance programme to the poorest countries, whereas the United Kingdom disburses no less than 70 per cent? Therefore should we not, for the financial perspective 2000–2006, say to the European Union, "We will do it ourselves and make sure that the poorest countries benefit."?

Clare Short: I agree with the hon. Gentleman almost completely. The Select Committee report was excellent, and I did not have to take it to Commissioner Pinheiro. He knew that it was coming and had already obtained a copy, and was somewhat sensitive to the criticism, which shows that the report is a valuable piece of work. I also agree that the skew of EU programmes against the poorest countries is an absolute scandal and a disgrace. I do not want just to blame the previous Administration, but I think they could have done more, and we are trying to achieve some reform.
I also agree with the hon. Gentleman that we should impose on the next settlement conditions that try to achieve much better programmes. It is worth allowing the EU to have development programmes, because no country can work in every country, but we need a big improvement in performance. The current situation is completely unsatisfactory.

Mr. Gray: For a second or two I was encouraged by the fact that the Secretary of State seemed to agree with my hon. Friend about how important it is that the United Kingdom should decide how the £700 million is spent, but I was rather disappointed by the second half of her answer. Is she not worried about the strength of criticism, from the non-governmental organisations in particular, about the fraud and corruption, the mis-spending and the EU bureaucracy which are bogging down British taxpayers' money? That money is not getting through to the poorest people in the world.

Clare Short: I am not worried by the strength of NGO criticism; I am trying to get the NGOs to voice their criticisms more loudly. I am doing my best to encourage British NGOs to work with NGOs throughout the European Union to achieve a united and stronger voice of critical public opinion across the EU, and to achieve an improvement. I agree with the hon. Gentleman that the


current situation is not good enough. We need much louder demands in all our Parliaments and from our publics for an improvement, which could easily be made if there was enough will to achieve one.

Mr. Levitt: My right hon. Friend has given us a helpful answer in respect of the Council of Ministers. Will she now build on that, and tell us what contact she has had with Members of the European Parliament with the aim of focusing EU aid more effectively on the poorest countries?

Clare Short: My hon. Friend makes an important point. The European Parliament now has a much greater say in the budget. We have been working hard to make allies not only in non-governmental organisations across Europe, but in the Parliament. We want much stronger pressure to be applied to the Parliament for an improvement in programmes.
My hon. Friend the Under-Secretary visited the Parliament a couple of months ago, and I have visited it twice. I have also paid a visit to the Development and Co-operation Committee. We are working hard at finding allies in order to secure improvements.

Mr. Bill O'Brien: I congratulate my right hon. Friend on the work that she is doing to aid poorer countries overseas. In the context of the negotiations with the European Commissioner, however, will she have regard to the work of the Council of Churches in the United Kingdom, which is also working hard to help people in those poorer countries, with health and education in particular?

Clare Short: I entirely agree with my hon. Friend. We are working a good deal with the Churches, both in the debt campaign and in the attempt to initiate a worldwide Churches campaign demanding that the Governments concerned meet the international poverty eradication targets subscribed to—in theory—by all countries.
I agree with my hon. Friend that the Churches do great work, but there is more that we can do together.

Mr. Bowen Wells: Does the Secretary of State agree that trade must happen along with aid, so that people in third-world countries can help themselves? Will she join me in trying to persuade the Foreign Secretary and the Prime Minister that President Clinton should in turn be persuaded to call off the war against the small countries of the eastern Caribbean over the banana trade?

Clare Short: I agree: the developing countries must escape from the need for aid through the ability to trade, to build up their economies and to stand on their own two feet. The more chances that we can provide for them to do that, the better.
I also agree with the hon. Gentleman that the conflict over bananas is very serious and worrying. The banana trade, so important to fragile Caribbean economies, is at stake; but so is a rules-based system for international trade. If we lost that system and slid back into protectionism, the whole world would pay a huge price.

Maternal Mortality

Barbara Follett: What measures her Department is taking to help reduce maternal mortality in the developing world. [73835]

The Secretary of State for International Development (Clare Short): Pregnancy remains a life-threatening condition for millions of women in poor countries. The injury and loss of life is a tragedy for the women concerned, and usually results in desperate poverty for their children. It will be very tough to meet the internationally agreed target of reducing maternal mortality by 75 per cent. by 2015. We are working to reduce maternal death and injury in our programmes in around 20 countries; we are also collaborating with the World Health Organisation, the World bank and other United Nations agencies to strengthen the international effort.

Barbara Follett: Is my right hon. Friend aware that the United States is currently unable to meet its obligations to the United Nations because of internal resistance to UN family planning programmes? The equivalent of four jumbo jet loads of women are dying from pregnancy-related causes in the developing world every day of every year. Will my right hon. Friend do all that she can to break the deadlock?

Clare Short: It is certainly worrying that the greatest power in the world is not paying its dues to the UN system, at a time of globalisation when we need a stronger and more effective United Nations. As my hon. Friend will know, President Clinton has tried to persuade Congress to pay those dues. I feel that we must do all in our power to back him, because we need the UN backed by the United States of America.

Mr. Andrew Rowe: Does the Secretary of State agree that, in many of the countries that we are discussing, a number of the threats to maternal health stem from religious and cultural taboos? Will she assure me that her Department is working with theologians throughout the world—especially Islamic theologians—to ensure that the Koran, which is actually a very women-friendly gospel, is interpreted as such in many countries where the oppression of women causes a good deal of maternal mortality?

Clare Short: I agree with the hon. Gentleman that nothing in the teaching of Islam says that women should be second-class citizens, or justifies anything like female genital mutilation. There is no question about that; all Islamic scholars will tell us that.
The problems of women throughout the world are the result not only of prejudice under Islam—often, there is simply neglect in basic health services—but I can assure the hon. Gentleman that we are challenging all such prejudice, including that of some of the fundamentalist Churches in the United States, which call themselves Christian. [Interruption.]

Madam Speaker: Order. The House must come to order.

Oral Answers to Questions — PRIME MINISTER

The Prime Minister was asked—

Engagements

Ql. [73859] Mr. Laurence Robertson: If he will list his official engagements for Wednesday 10 March.

The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Mr. Robertson: Given the Prime Minister's motion to the House on 3 February stating that the Government had a commitment to protect the green belt and open countryside, and to increase the number of houses that were built on brown-field land, does he still support that policy? If so, given that my constituency of Tewkesbury has few brown-field sites, can he tell me why his own inspector proposes in his report that a disproportionate number of houses be built in Tewkesbury, and that thousands of houses be built on the green belt, on green fields and in the open countryside? Is that not yet another example of the Government saying one thing and doing another, just as in yesterday's Budget?

The Prime Minister: The hon. Gentleman did not decide to raise the Budget, did he? I am surprised that he did not welcome the fact that, thanks to—

Mr. Robertson: Answer.

The Prime Minister: I will come to the question in a moment, but thanks to—[Interruption.] Conservative Members do not want to talk about the Budget at all. Eleven thousand families in the hon. Gentleman's constituency are better off as a result of yesterday. As for the green-field and brown-field sites, Labour is the party that, in government, has raised the amount of building that there has to be on brown-field sites. We have changed the policy that was left to us by the earlier Government.

Mr. Jonathan Shaw: May I say how welcome was the boost for businesses and jobs in yesterday's Budget? But my right hon. Friend will be aware that, if duty free is scrapped, some 5,000 jobs in Kent and Medway will be at risk. Can he give an assurance to the House and to the people of Kent and Medway that the retention of duty free will be at the top of his agenda when he meets European Union Ministers later this month?

The Prime Minister: It has been at the top of our agenda. We have made a certain amount of progress in order to get an extension of the regime, because the successor regime simply is not good enough for our country and, indeed, other countries in the European Union. My hon. Friend will know that the problem we have is that the previous Government agreed to the abolition of that scheme. None the less, like many other problems that were left to us by the previous Government, we are sorting it out.

Mr. William Hague: Now that we have the figures behind the propaganda, will the

Prime Minister explain why the Chancellor of the Exchequer failed to make it clear in his Budget speech yesterday that his changes to national insurance contributions mean a tax rise for self-employed people of £240 million?

The Prime Minister: The right hon. Gentleman is wrong: we announced all the changes yesterday. As a result of our changes, there is a net tax cut for everyone— direct taxes of £9 billion.

Mr. Hague: The Chancellor made no reference in his speech to the tax rise of £240 million. Does the Prime Minister recognise that, when we look at the figures, and I do not know whether he has looked at the Government's own figures—normally he does not look at them—we see that all the tax reductions for companies, first-year capital allowances and so on are more than cancelled out by that one single measure, the cost of which the Chancellor did not refer to in his speech? Does that not illustrate not only that the presentation of the Budget was inaccurate and misleading, but that, for every trumpeted tax reduction, there was a corresponding stealth tax increase?

The Prime Minister: No. The right hon. Gentleman was wrong when he said that yesterday, and he is wrong when he says it today. Today, he should have read the Budget figures more carefully. [Interruption.] I have them here—at page 14—and they show a net tax cut of £4.5 billion. It is there in the Red Book, right in front of his nose.

Mr. Hague: I do not know whether it is more worrying that the Prime Minister does not know the truth, or that he is not prepared to admit it. So—given that he has been looking at some of the figures—let him answer this central question: what is the total tax increase for the coming year, in pounds, as a result of the Government's Budgets to date?

The Prime Minister: There is a net tax cut of£4.5 billion. That is what the right hon. Gentleman seems unable to handle. He seems unable to handle the fact that we are cutting taxes. Furthermore, he and his spokesmen have been touring the television studios, relying on the Institute for Fiscal Studies, to say that a whole series of people are worse off because of the Budget. He may like to know that, this lunchtime, the IFS has reissued its figures, which show that every tenth of the population— the top 10 per cent. as well as the bottom 10 per cent., and every 10 per cent. in between—is better off because of the Budget.

Mr. Hague: Oh, now, let us cut the waffle and the propaganda, and let us have the answer to the question that I asked—this is Prime Minister's Question Time. What is the total tax increase for the coming year as a result of the Government's Budgets to date?

The Prime Minister: There is not a tax increase— [Interruption.] No, I am afraid that I have to tell the right hon. Gentleman that there is not a tax increase. Tax is falling by £4.5 billion net. The average family is £740 a


year better off. The average pensioner is £240 a year better off. In total, 20 million families are better off. They are better off under Labour.

Mr. Hague: What is the total tax increase for the coming year, in pounds, as a result of the Government's Budgets to date?

The Prime Minister: I wish that the right hon. Gentleman would simply listen to what is being said to him. We are cutting net taxes. The l0p rate is a tax cut. The national insurance rate is a tax cut. The basic rate is a tax cut. We are putting up child benefit. We are putting up people's children's credit. Pensioners are getting an increase. Labour is the party bringing down taxes for every single family that has had them put up by the Tories.

Mr. Hague: So the right hon. Gentleman does not want to answer the question. The actual answer—easily arrived at with the Treasury's own figures and a calculator, and easily arrived at by the House Library in the figures that it produced last night—is that the total tax increase in the coming year as a result of the Government's Budgets to date is £7,100 million. In the following year, the increase is £10,500 million. The right hon. Gentleman does not want to admit that because, when they said no tax increases at all at the general election, they lied to the people of this country. With his pick-pocket Chancellor and his stealth taxes, taxes have gone up, are going up, and are going to carry on going up.

The Prime Minister: Not merely is the right hon. Gentleman wrong—as the table on page 154 of the Red Book shows, the tax burden is falling next year, not rising—but, comparing current tax tables with the Conservatives' planned taxation, as outlined in their last Budget, taxes will be lower at the end of this Parliament than they would have been as planned by the Tory party. He is going to have to get used to one or two very simple facts. This is the Government who sorted out the huge debt left us by the Conservatives. This is the Government who have curbed inflation, which was rising under the Tories. This is the Government who have given us the lowest interest rates and mortgage rates for more than 30 years. This is the Government who have given the best deals for pensioners year upon year. This is the Government who have got tax for ordinary families down below 20 per cent. This is a new Labour Government delivering economic competence and social justice together. What a contrast and what an improvement on the old Tory years.

Mr. Malcolm Savidge: Given not only the assistance to the over-50s seeking employment, but all the other measures in the Budget, does my right hon. Friend feel that more members of the shadow Cabinet may feel encouraged to follow the example of the shadow Foreign Secretary and spend more time with their finances?

The Prime Minister: I do not know quite how many members of the Opposition Front-Bench team will benefit from our proposals, since they seem to have many different sources of income, but if I could simply say— [Interruption.]—not that I am suggesting that there is

anything wrong with that at all. Our proposals for helping the over-50s back into work will deal with the fact that one third of the over-50s below retirement age are not in work. I believe that many of them would like to work if they were given the chance to do so. The new package will help them.

Mr. Paddy Ashdown: Of course I am delighted that yesterday's Budget contained so many Liberal Democrat measures, but why did the Chancellor leave out the most important one? Is it not clear that, by deciding to cut income tax by a penny next year, the Government have revealed that their real priority is undercutting and wrong-footing the Tories, when it ought to be education?

The Prime Minister: First, I thank the right hon. Gentleman for what I take to be a compliment on the question of Liberal Democrat policies. Perhaps that is a good reason for people to vote Labour rather than Liberal Democrat in the forthcoming election.
On the point that the right hon. Gentleman makes about 1p, it is important to recognise that we have delivered not just the basic rate cut, but the largest single increase in public service spending over three years that this country has seen in our schools and hospitals. We understand that it is important to give incentives to people to work and to target help on hard-working families, as well as putting a substantial investment into our public services.

Mr. Ashdown: The Prime Minister is simply wrong in that. There was not a single penny extra for public services in yesterday's Budget. There was recycled money from previous decisions. The Prime Minister had a clear choice: it was education or politics, and he chose politics. May I bring the Prime Minister's attention to the situation in Scotland? This Labour Government have cut in real terms the amount of money put into education in 29 of the 32 Scottish councils. Even after the Budget and even after the end of this Parliament, the Labour Government will have put less money into education in those councils than the Tory Government did three years ago.
I have a very simple question for the Prime Minister: on the eve of the establishment of the Scottish Parliament, is he saying not only that the Scottish people will not be able to raise their taxes to spend the money on better schools, but that now they must follow him in cutting them?

The Prime Minister: When the right hon. Gentleman put to me the 29 out of 32 authorities, I went back and looked at the figures. He is comparing budgeted figures with outturn figures, and is doing so wrongly. I can give him the true figures. Education spending in Scotland is increasing by 15 per cent. It is not being cut as he says.
As for the right hon. Gentleman's strictures on lowering the basic rate of tax, we believe that targeting tax measures on those families that need them and making sure that people get to keep more of their money and have the incentive to work, at the same time, as putting money into public services, is the right way to guarantee both prosperity and better public services.
To go back to the election campaign, the amount that we are putting into schools and hospitals is 10 or 11 times what the right hon. Gentleman's party asked us to put in. The truth is that, no matter what the tax rate is, he always wants to put it up.

Mr. Phil Woolas: Whatever the figures show in Scotland—I listened to my right hon. Friend's comments with great interest—in the borough of Oldham, education expenditure will increase next year by almost £5 million and three new schools will be built in my constituency alone. I look forward to visiting those primary schools to announce the £2,000. Would my right hon. Friend like to come to Oldham with me to congratulate the head teachers on the successful hard work that Opposition Members oppose?

The Prime Minister: My hon. Friend is right to say that there is £2,000 for each school in every constituency; there is additional money to deal with class sizes and for school buildings and nursery education. Yes, the capital money announced yesterday comes out of the capital modernisation fund, but it has now been allocated by us to schools, hospitals, transport and crime—precisely the priorities of the people of this country.

Mr. Christopher Gill: Perhaps I could ask the Prime Minister a less sycophantic question. He will appreciate that the Ludlow constituency is a large and sparsely populated rural area, where there is almost no alternative to road transport. What timely words of advice does he have for my constituents who find themselves, as a result of his Budget yesterday, paying no less than 85p tax for every pound that they spend on petrol? While he is thinking of the answer to that question, will he also consider what he will say to the road hauliers who find that the duty on diesel has been increased by an astronomical 11.6 per cent?

The Prime Minister: In relation to the hon. Gentleman's constituents and their cars, we announced the first cut in the licence fee for 50 years. It is also correct to say that we have put a large additional sum into rural transport—something that the Conservative Government never did. As for the fuel escalator on petrol, Conservative Members should remember that they introduced it; they not merely introduced it, they introduced it for road hauliers as well.
More than 10,000 families in the hon. Gentleman's constituency are better off as a result of the Budget. Furthermore, almost 16,000 pensioners are better off as a result of the Budget.

Mr. Gareth Thomas: While welcoming the environmental measures in the Budget, may I draw my right hon. Friend's attention to a serious oil spill that occurred off the coast of north Wales last weekend? It involved the offshore operator BHP, and was the second such incident in nine months. Given the growing concern all over the United Kingdom about marine oil pollution, does my right hon. Friend acknowledge that big oil companies will cut corners unless there is effective and independent regulation? Will he ensure that the courts pass tough sentences for such offences, so that this message is sent, "the polluter must pay"?

The Prime Minister: I know that this is not the first time that there has been a spill from BHP petroleum's

facility in the Liverpool bay development. I understand that, as my hon. Friend indicates, the Department of Trade and Industry is prosecuting BHP for an earlier incident. The latest incident is being fully investigated by a DTI inspector. The Department has also taken steps to ensure that independent assessors conduct a review of the incident. In general terms, I agree with what my hon. Friend says. Of course, penalties are a matter for the courts.

Mr. Steve Webb: Is the Prime Minister aware that people in my constituency are receiving letters from Frenchay hospital telling them that they will have to wait 104 weeks to see an orthopaedic consultant, perhaps to be put on a waiting list? Will he promise my constituents not to cut the standard rate of income tax until those waiting times have been slashed?

The Prime Minister: We are getting waiting times down, and have done so consistently—they are down by more than 100,000 in the last six months. The additional £21 billion that we are putting into the health service from 1 April onwards is precisely in order to make the necessary improvements. Those improvements are not just in accident and emergency departments, but in technology in the health service and primary care facilities. It will take time to sort out the problems in the health service, but we will sort them out with the new investment.

Mr. Jim Murphy: My right hon. Friend will be aware how warmly welcomed the Budget was in Scotland—particularly the new investment in schools, families and pensioners. Does the Prime Minister share my view that Scotland's future is one of efficient taxation and making work pay? Does he share my concern that the future well-being and standard of living of Scottish people will be threatened by any plans to divorce Scotland from the rest of the United Kingdom?

The Prime Minister: Divorce from the United Kingdom would cost Scotland very dear in jobs, industry and the future of the country. My hon. Friend is right to draw attention to the fact that there is £165 million of additional capital investment going into Scotland over the next three years, on top of the £3 billion for schools and hospitals that we announced earlier. As a result of the Budget, substantial numbers of Scottish families will not just be better off, but get the public services that Scotland deserves.

Mr. Michael Colvin: Does the Prime Minister agree that the Chancellor's introductory remarks to yesterday's Budget—

Mr. Brian Jenkins: Were brilliant.

Mr. Colvin: In this respect, they were. Did not those remarks give a further indication—if that were required— that the Government inherited a very sound economy from the previous Conservative Administration? While he is checking that, will the Prime Minister recall that the nation was promised stability? With economic growth in the last quarter of 1998 at 0.2 per cent., are not he and the Chancellor trying to achieve stability by stopping the


economy? Are not the Chancellor's estimates of economic growth for the next two years—on which the whole Budget is based—wildly optimistic?

The Prime Minister: The hon. Gentleman need not take my word for it. The International Monetary Fund report into the handling of the UK economy, published the other day, is one of the best reports that any country has received from the IMF for many years. The report said:
Executive Directors commended the authorities for the United Kingdom's impressive economic performance",
and went on to talk about the consolidation
needed to help redress the policy mix imbalance that had developed in the early 1990s and to reverse the effects of a series of deficits.
The truth is that we did not inherit an economy in great shape; we inherited an economy with national debt doubled and inflation back in the system. It is thanks to this Government that both those problems are now solved, and we can look forward to the recovery of economic growth, as we have intended.

Mrs. Helen Brinton: Following the publication of the Macpherson report and the Home Secretary's acknowledgement of the need to stamp out racism, not only in the police force but in all public services, does the Prime Minister agree that it is most vital that the mental health sector is included in those investigations and considerations, and that consideration is given to the use and application of control and restraint techniques—particularly following the death of my constituent, David Bennett?

The Prime Minister: Our sympathies go to Mr. Bennett's family, and I know that my hon. Friend has been very concerned about the case. The NHS trust has begun a review into the circumstances surrounding his death. We are committed to stamping out racism in all public services, including the whole NHS. In addition, she will know of the measures that were announced recently to improve control and restraint techniques within the mental health service. There will be zero tolerance of racial harassment or racial discrimination of any kind in the national health service, or any other part of our public services.

Mr. Howard Flight: I am sure that the Prime Minister will be aware of the fact that the tax changes abolishing the recoverability of advance corporation tax will result in a loss of revenue to charities of about £500 million a year, on a phased basis. I can find nothing in the Government's review of charity taxation to offer compensation for that. What do the Government intend to do about it? I am sure that someone as professedly caring as the Prime Minister would not want to preside over a Government imposing the biggest increase in taxation on charities in memory.

The Prime Minister: The hon. Gentleman is wrong. When we announced the plans for charities, we said that they would be implemented over seven years. We are in consultation with the charities. My right hon. Friend the Chancellor listed a whole series of measures that we are taking to help people to give money to charities. New reliefs have been introduced that will have precisely the

opposite impact to the one that the hon. Gentleman described. All the measures taken together give a very good deal indeed to the charitable sector.

Mr. Jeff Ennis: Is my right hon. Friend aware that one in 18 workers in my constituency is currently paid £2.49 or less an hour? Does he agree that the implementation of a national minimum wage will reduce further the current inequalities in our society?

The Prime Minister: The minimum wage will help 2 million low-paid workers in the United Kingdom. The working families tax credit, and the increases in it, will give 1.5 million families at the lower end of the income scale an increase of up to £20 a week. We now know that the Conservative party is committed to abolishing both the minimum wage and the working families tax credit. Every one of those low-income families should know that, if they vote Conservative, they put at risk not only the floor beneath their wages in the form of the minimum wage, but a £1.5 billion family tax cut which will benefit some of the poorest families in the country.

Mrs. Angela Browning: Is the Prime Minister aware that 80.4 per cent. of households in my rural Devon constituency own a car, for very obvious reasons? We do not want to know about 1100 cc cars in Devon: we would never get them up the hills. When the Prime Minister replied to my hon. Friend the Member for Ludlow (Mr. Gill), he seemed to suggest that the gains for rural areas in the Budget could somehow sop up the amount that would have to be paid for petrol. What is his message to an area where cars are essential, but where the wages are lower than the national average? Is this not yet more discrimination against people living and working in rural areas?

The Prime Minister: The opportunism and hypocrisy of the Tory party know absolutely no bounds. The hon. Lady was a Minister in the previous Government at the very time they introduced the fuel escalator. As a result of the Budget, 21,000 pensioners and 12,500 families are better off in her constituency. If she is concerned about low pay, she should support the minimum wage and the working families tax credit, instead of which she is committed to abolishing them.

Al Shifa

Mr. Tam Dalyell: If he will apologise to the Government and people of Sudan for his endorsement of the bombing of the Al Shifa factory; and if he will hold discussions with President Clinton about giving all possible assistance for the rebuilding of the Al Shifa factory.

The Prime Minister: Last August, I gave my support to the United States action. It was action against international terrorists. The US told us at the time of the strike on Al Shifa that it had compelling evidence that the plant was being used for the production of chemical weapons materials.

Mr. Dalyell: Have the Government any hard evidence that Al Shifa manufactured VX precursors or any other chemical weapons-related compounds, or have they not?

The Prime Minister: Yes. The US was quite clear: it had compelling evidence that Al Shifa was involved


in chemical weapons production. Terrorist organisations operating out of those places caused the death of more than 100 totally innocent people by acts of terrorism in Africa. The assault on Al Shifa was retaliation for that; no one was killed in it, but we gave a very clear signal— and I think the right one—to those who engage in international terrorism that we are prepared if necessary to take action in retaliation.

Engagements

Jackie Ballard: Does the Prime Minister agree with the Chancellor who last November predicted that there would be no recession in British manufacturing, or the Chancellor who yesterday admitted that there would be a fall in output of between 1 and 1.5 per cent. this year? Does he agree that last November's prediction was the worst forecast since Michael Fish said that there would be no hurricane?

The Prime Minister: That latter part is wrong, since the worst time for manufacturing industry was in the

early 1990s, when output fell by 7 per cent, and 1 million manufacturing jobs were lost. The single most important thing for manufacturing industry is stability for the long term. That is best guaranteed, first, by policies that are disciplined on public finances, which is a lesson that the Liberal Democrats would do well to learn—if I may attack them for a moment—and, secondly, by lower interest rates. As a result of the action that this Government have taken and the independence of the Bank of England, we have managed to get the lowest interest rates for 30 years.

Mr. Paul Tyler: Boom and bust.

Mr. Bob Russell: Boom and bust.

The Prime Minister: Quite right. The other thing that we must avoid is any return to Tory boom and bust.

Madam Speaker: On that note, we should now move on.

Enterprise and Competition

The Secretary of State for Trade and Industry (Mr. Stephen Byers): With permission, Madam Speaker, I wish to make a statement on enterprise and competition. Yesterday, my right hon. Friend the Chancellor of the Exchequer delivered a Budget for Britain to succeed in the new knowledge-driven economy and to promote prosperity and fairness. Today, I wish to announce a number of complementary measures, which will boost enterprise and competition.
First, I am publishing a detailed implementation plan for our White Paper, "Our Competitive Future: Building the Knowledge Driven Economy". For each commitment, we have set out a series of targets, a timetable and the contact details of the officials in my Department who are responsible for delivering those commitments. That unprecedented step demonstrates our belief in open government, our desire to work closely in partnership with business and our determination to deliver on our commitments.
I am also publishing today a strategic framework for the Department of Trade and Industry, setting out the objectives for my Department and the work that we will undertake in pursuit of those objectives. Copies of both documents have been put in the Library and the Vote Office.
The policies in the White Paper that we published before Christmas apply to all sectors: traditional and high-tech, manufacturing and services. Work is well under way on many of the proposals contained in the White Paper. I have established a review of bankruptcy and insolvency law, to examine whether we can encourage responsible risk-taking while coming down hard on those who set out to defraud creditors. It will report to me next month. Separately, I am reviewing arrangements for business rescues to find out whether the law should be changed to give businesses in difficulties more chance and more time to turn things round. I shall announce our conclusions in the summer.
This afternoon, I want to announce four new funds to support business. First, we will be providing £20 million to achieve our target of high quality support for 10,000 business start-ups by 2001. The programme will be launched this summer.
Secondly, a new enterprise fund will stimulate the availability of finance for the small and medium enterprise sector. I have increased the fund to £160 million. It will lever in an additional £350 million from the private sector to ensure that more than £500 million is available to support loan guarantees for small firms and for support for regional venture capital funds aimed at the provision of small-scale equity and a national scheme to support high-tech businesses.
Thirdly, following the Chancellor's announcement yesterday of a further £20 million for high-tech venture capital investment, we will create a new fund operating across the United Kingdom, focusing on young high-tech firms that need small amounts of equity.
Fourthly, I can announce that we have decided to expand the successful SMART—small firms merit award for research and technology—scheme. From April, a wider range of individuals and businesses, particularly

those in the manufacturing sector, will be able to receive help to research or acquire technologies needed to turn good ideas into commercial reality. We shall increase annual spending by more than a third and provide almost £100 million over the next three years.
Science and the commercial exploitation of scientific research have a key role to play in improving Britain's competitive position. That is why we will develop a strategy to improve knowledge transfer, stimulate the flow of scientists and engineers into industry, and encourage knowledge-based industries. We shall publish proposals in that key area by the end of the year.
Today, following yesterday's Budget statement, we are publishing four documents on tax changes to stimulate innovation and enterprise, especially in smaller companies. The introduction of a tax credit for research and development will be a major step on the road to raising the UK's performance, giving real help to thousands of smaller firms that are working to introduce new products and processes. It will underwrite almost a third of research and development costs for small business, giving the sector a boost of £150 million a year.
Enterprise management incentives will allow smaller companies to give tax-advantaged equity remuneration. We shall also publish proposals on corporate venturing and tax reform for intellectual property. Together, these papers demonstrate our commitment to a framework in which small business can thrive.
Small and medium-sized firms need further help too. I intend to establish a new body—the Small Business Service—which will be specifically designed to meet the needs of smaller businesses. I can announce that it will have more than £100 million of new money to support its important work. The body, which will report to me, will be headed by a high profile chief executive. It will have two key responsibilities: to act as a strong voice for small business at the heart of Government; and to improve the quality and coherence of delivery of Government support programmes for small business and ensure that they address their needs.
The areas in which I expect the service to be involved include: the provision of a new automated payroll service for all new small and medium-sized enterprises; supporting the Revenue in providing business support to discuss problems within 48 hours; giving advice with Customs and Excise for exporters and importers; and, working with the Revenue on internet filing of tax returns. Consideration will need to be given to the relationship between the service and the newly established regional development agencies.
A modern, effective competition regime is necessary to reward innovation and enterprise, and to bring real benefits to consumers. The Director General of Fair Trading is already looking at a number of areas— including cars, supermarkets and private medical insurance—and he has referred over-the-counter medicines to the restrictive practices court for examination.
More needs to be done. I shall therefore exercise my powers under section 12 of the Fair Trading Act 1973 to give the director general directions indicating issues that he should take into account in determining his priorities. I shall also exercise my power under section 13 of the Competition Act 1980 to ask the director general to investigate particular prices.
In relation to prices, there is widespread concern that those paid in the UK for goods are higher than prices in other countries. I have begun today a study on international price comparisons, which will help competition authorities to identify markets that require their attention. It will be made public, so that consumers and others can comment. I will then decide which prices I will ask the director general to investigate.
We are also taking action to provide a modern framework for utility regulation. Electricity standing charges are a matter of pressing concern; they account for around 13 per cent. of a typical household bill and can rise to 20 per cent. for low volume users. Figures which I am publishing today show a wide variation in standing charges by region and by method of payment. I have today written to the energy regulator asking him to look at standing charges to ensure that pensioners and the poor, in particular, are not disadvantaged.
I also believe that the time is right to introduce a modernised merger regime. Businesses need stability and confidence that decisions in those important areas are not taken for short-term political considerations. I believe that the system could be improved if merger decisions were normally taken by independent competition authorities against a competition-based test. A small minority of cases will raise important and wider public interest issues, such as those involving the defence industries, and Ministers would continue to have a role in such proposals. I intend to publish a consultation document to begin a full debate on that important issue.
To secure real competition we need knowledgeable and well-informed consumers. To that end, we shall publish a consumer strategy White Paper before the summer. However, there is one area of particular concern. A mortgage is the largest and most complex financial commitment that most people will ever enter into. I have today announced proposals to improve the information available to customers in relation to the marketing of mortgages and other credit. Our proposals will give them access to clear information about the interest rates on offer.
The measures that I have announced today show our determination as a Government to support enterprise and to succeed in the knowledge-driven economy of the future. They complement the radical proposals set out yesterday by the Chancellor and I commend the statement to the House.

Mr. John Redwood: I thank the Secretary of State for his statement, although I was perturbed to read all its main points, before I came into the Chamber, on a Press Association tape and to learn from journalists that every major item had been briefed to the press by the Secretary of State and his officials before he made the statement. It is not right that Members of Parliament should hear about his proposals from the media before they do so in this House.
I hope that when the Secretary of State draws up his list of sinners who need referral for high pricing, he will include the Chancellor of the Exchequer. He is the main offender on petrol and diesel prices and on costs for the haulage industry. I hope that he will take responsibility for the problems that the motorist is now experiencing.
It has taken the Government nearly two years to decide that Britain needs lower prices and more competition. They have abandoned the case-by-case approach of the previous Government. Conservatives broke monopolies and introduced competition on an industry-by-industry basis. This Government have spent two years talking about competition but done nothing significant to further it. All they have done is to put up business costs and business taxes. My right hon. and hon. Friends and I are all for lower prices and more competition. That is why we broke the monopolies in telephones, electricity and gas and that is why I have urged the Government to break the monopoly in water. Will the Secretary of State now pledge to introduce water competition for retail householders as well as for businesses? Do the Government want to break the present car distribution system and introduce car supermarkets? Simply telling us that car prices are too dear does not tackle the problem. Do the Government intend to outlaw recommended prices for newspapers, or does the Secretary of State value the present newspaper distribution arrangements? Does the right hon. Gentleman want to change the tied house arrangements in the brewing industry, or not? Will he remove the advantages local pharmacies currently enjoy?

The Minister for Energy and Industry (Mr. John Battle): What a cheek.

Mr. Redwood: The Minister may say that, but those are the policy issues, and if the Government want to introduce more competition and lower prices, those are the issues that they should tackle. The previous Conservative Governments were tackling them case by case; we had a fine record of breaking many monopolies, but there are still more to be broken—will the Labour Government do it, or not?
It is a cop out to say that the Government will run a poor man's Which? magazine to tell us how much we are suffering, but that they will take no policy action where they could do so to tackle the problem at source. There is absolutely no evidence that the Government are the customer's friend; they talk about being so and spin that they are, but they funk the decisions necessary to bring prices down.
We are told for the 16th time that the Secretary of State wants to reserve to himself competition issues relating to defence and some other cases, despite his belief in independence; so will he rule out now all Secretary of State involvement in media cases? If his argument is that his views as a Minister could be in conflict with making a fair judgment in certain cases, surely that must apply most of all to cases involving the media, given the Government's predisposition to trying to influence the media in their direction.
Will the Secretary of State assure us that he will have nothing to do with the BSkyB bid for Manchester United and that he will rule out interest in all media bids in the future, contrary to the generosity displayed by him and his colleagues in all their press briefings up to today's briefing on this statement? Does he not understand that to achieve a judgment in the BSkyB-Manchester United case that is fair to the two balanced teams that are fighting that bitter battle, he should set out in advance, working from general principles, whether or not the Government think that media interests should be able to buy sports clubs.


His failure to set out a general policy leaves him wide open to the charge of being unfair to one or the other of the parties when the judgment is finally made.
The Secretary of State has announced an enterprise fund; it has been announced countless times before. It shows how much Labour believes in policy recycling if in no other sort of recycling that we have to hear such announcements time and again. This time, £10 million has been added to the fund to give the excuse for re-announcing it, but, in Labour's old language, it is not new money. The fund is small recompense for the massive tax hike that business is experiencing. Why do the Secretary of State and the Prime Minister not realise that hiking national insurance contributions for the self-employed and hitting business motorists takes away far more money than is being put back through that small enterprise fund? If the Secretary of State left business more of its own money, he would need to propose fewer handouts.
The right hon. Gentleman proposes a Small Business Service at considerable cost. I can tell him what small businesses want: less regulation, lower taxes, no increase in national insurance for the self-employed, no increase in motoring taxes, no increase in haulage taxes, no increase in stamp duty, and no increase in VAT levies—all things that are in the Chancellor's Budget, but which he does not understand are bad for business. Businesses face a massive tax hike as a result of the Chancellor's third Budget, just as surely as the huge tax hikes that resulted from his first two Budgets.
If the Government want to earn the name of friend of business, they must sweep aside the regulations that they are putting in place and genuinely cut business taxes. Instead of gimmicks, they must offer real support to the business community.

Mr. Byers: It is most noticeable that the right hon. Gentleman has clearly not discussed with business its response to yesterday's Budget and to the measures that I have announced today. Were he to do so, he would learn that the targeted support that we intend to give has been warmly welcomed by industry, which recognises the assistance and support the Government can give in particular areas. I would point out to the right hon. Gentleman, in a friendly way, that he should begin a dialogue with business if he wants to speak as shadow Secretary of State for Trade and Industry. Clearly, he is failing to do that. In addition to that, he appears to be suffering from memory loss: judging by his remarks just now, the policies that he supported as a member of the Cabinet—for example, in voting for the petrol duty escalator—have been suddenly forgotten.
The right hon. Gentleman is right to talk about breaking down utilities and removing them from the public sector, but the Conservative Government effectively created private single monopolies in those areas. It has been left to the Government to break down monopolies and create a market that will deliver benefits to consumers. I can confirm that, as the Chancellor announced yesterday, there will be a review of the water industry as well.
On the new, modernised merger regime, we will operate under the existing provisions for as long as they are in place. I will discharge my responsibilities as Secretary of State, but we will consult because we believe that there is a better procedure that could

be adopted. I hope to be able to bring the results of that consultation to the House in due course. There is no question that we shall discharge our current statutory duties in a quasi-judicial manner that is fair to all parties, and we will be guided by the report from the Monopolies and Mergers Commission. I expect to receive its report regarding BSkyB and Manchester United on Friday of this week.
I was disappointed by the right hon. Gentleman's response—I know that that should come as no surprise, but I live in hope. It is remarkable that he did not mention Brussels once in his contribution—which must be a first for him. However, he still missed the point. The statement that I have delivered this afternoon and the range of measures that we intend to introduce will support business. They are about innovation and enterprise and will at last give a new deal to consumers—an area that was totally ignored in the 19 years of the previous Administration.

Mr. Redwood: Eighteen years.

Mr. Byers: It seemed like 19 years. I believe that our measures will be welcomed warmly.

Several hon. Members: rose—

Madam Speaker: Order. We have a lot of business before us today and I am having to restrict Back-Bench speeches to 10 minutes in the major debate. I hope that there will be brisk questions and brisk answers from the Dispatch Box so that I will be able to call as many hon. Members as possible.

Mr. Martin O'Neill: Is it recognised that, in recent years, the Office of Fair Trading has lacked focus and resources because of the number of jobs that it has undertaken? Those of us who have had dealings with the OFT have been disappointed with the speed at which it has moved and the urgency with which it has often dealt with matters. I hope that those difficulties will be remedied by the extra resources and extra powers that my right hon. Friend is choosing to commit.

Mr. Byers: My hon. Friend makes an important point. There is no doubt that the Office of Fair Trading was under-resourced as a result of the decisions taken by the previous Government. During my time as Chief Secretary to the Treasury, I was pleased to be able to agree some extra funding—a 20 per cent. increase—for the OFT. I think that will help enormously in ensuring that the office can work to a programme that is far more extensive than any of its programmes to date.
Most importantly, the OFT must approach issues more proactively. It must play an active role and guarantee that consumer interests are at the forefront of the work of the Director General of Fair Trading. If that happens, I am sure that the Government and the independent OFT can work together and deliver a far better deal to consumers in the future than they have received in recent years.

Mr. David Chidgey: I should like to ask the Secretary of State three specific questions in the interests of clarity and speed. Can he tell me precisely what targets his Department has set for improving


competitiveness and productivity and closing the skills gap? How will he measure progress towards those targets? What account has the Secretary of State taken of the forecast by the Institute for Fiscal Studies that 20 per cent. tax credit rates for small and medium-sized enterprises would increase the ratio of research and development expenditure compared with gross domestic product by less than one tenth of 1 per cent? Although I welcome the Secretary of State's proposed investigation into price competitiveness and the wide range of prices that consumers are charged, does he agree that his task would be easier if he were able to compare like with like— perhaps in just one currency: the euro?

Mr. Byers: I shall not go down that road this afternoon. [HON. MEMBERS: "GO on."] Well, they say that Labour Secretaries of State count their time in office in days rather than in months and years, and I want to try to get a few months under my belt.
On the important points that the hon. Gentleman raised, I have seen the IFS figures for its projections of the consequence of the tax credit for research and development, and I think that it is mistaken. The tax credit will make a big difference for SMEs. They have been asking for that measure and I am pleased that we were able to respond to their request in this Budget.
On productivity and improving skills, much joint work will need to be done across Government to deliver that agenda. I am already discussing in detail with my right hon. Friend the Secretary of State for Education and Employment the joint work that we can do to fulfil the need for skills to be developed and improved. I hope that we will be able to introduce many initiatives in the months and years ahead. On productivity, we need to continue working with the Treasury to identify ways in which we can make progress. The implementation plan for the White Paper that was published before Christmas reveals the timetable in which we shall achieve those objectives. When the hon. Gentleman has had the chance to read the implementation plan, he will recognise that we are serious about delivering on the commitments in that widely acclaimed document.

Mr. Peter Mandelson: I congratulate the Secretary of State on his excellent statement and wish him not only many months in his office but many years, which he will thoroughly deserve. I want to ask him about two aspects of the Government's agenda to which he has not referred. First, on the important subject of electronic commerce, when will the e-envoy—the digital ambassador—start work? Secondly, on competition and enterprise, when will the Government's proposals for the Post Office be implemented? It was envisaged that those would be introduced in the first quarter of this year. What or who is holding them up?

Mr. Byers: I am delighted that my right hon. Friend is here for my statement. Much of the implementation plan that we are publishing today builds on the excellent work over which he presided in the Department. I am pleased that we are able to implement many of the ideas that he advocated.
My right hon. Friend raises two important points. I interviewed two exceptionally good candidates for the post of digital envoy only 10 days ago, and I hope that

we will be able to announce an appointment in the next few days. When my right hon. Friend finds out who is likely to be appointed, he will think that we have made a very good selection for that important post.
On the Post Office, a good deal of work is going on to make sure that we have a White Paper that will command broad support across the House and out in the wider community. It will be a comprehensive document, which will demonstrate that we want a forward-looking Post Office for the next century. That will take some time, but it will be worth it to get the proposals right. I expect to be able to publish that White Paper within the next two months.

Mr. Ian Taylor: It would be churlish of me to criticise the Secretary of State too much because we started some of those measures when we were in government. I congratulate him on persuading his Chancellor in a way that I did not persuade mine about the proposals that he has announced this afternoon.
Will the Secretary of State take great care to ensure that the enterprise fund and the Small Business Service are staffed by people at least as entrepreneurial as those to whom they will be giving advice? I speak from some experience and I know that the service will break down, however much money one puts in, if the two sides of the equation are not properly matched. He will find that very difficult to achieve.
Secondly, the Secretary of State knows as well as I do that the devil will be in the detail of the application of the research and development grant and its success will depend on how the Inland Revenue interprets it. Will he please keep his eye on that and not pass it across to the Revenue?
Finally, why did the Secretary of State not persuade the Chancellor to cut capital gains tax to 20 per cent. or at least to introduce a 20 per cent. rate? That is his one big failing in the Budget, and I hope that he keeps working at it.

Mr. Byers: I shall pass on those comments to my right hon. Friend the Chancellor of the Exchequer. The hon. Gentleman's important point about the people who might staff and give advice in the Small Business Service is absolutely right. We need people with good, up-to-date, relevant experience who are able to mentor and to pass on that experience to the individuals who will come to the service for advice and assistance. We must see to that. One of the tasks that we will set ourselves will be to recruit the best possible people. With the additional new funding—it is new funding—coming into the service, and the recognition that there will be a voice for small business at the heart of Government but at arm's length from the Government, people will see that we are serious about providing a focus for the needs and aspirations of the small business sector.
I hear what the hon. Gentleman says about getting right the detail of the tax credit for research and development, and I will take a personal interest in achieving that objective.

Mr. Richard Burden: I welcome the statement. May I raise two points with my right hon. Friend? First, does he agree that a particularly important part of the SME sector that will need to be


targeted through these and other measures is second-tier suppliers in the automotive industry? The Accelerate programme in the west midlands suggests that more than 2,000 second-tier suppliers could face major challenges in the coming year. Can my right hon. Friend comment on the relevance of the statement to them?
Secondly, in relation to the small business fund—I suppose I am taking up a point made by the hon. Member for Esher and Walton (Mr. Taylor)—can my right hon. Friend assure me that the good ideas in that scheme will be properly linked to the RDAs and the regional agenda, so that the service to be established is not monolithic, but sensitive to regional and local needs and differences?

Mr. Byers: My hon. Friend makes an important point about developing the work closely with the RDAs to make sure that the small business service works with local agencies to give the best possible service to the small businesses in the locality.
With reference to the car industry generally, it is important that we give assistance to the supply chain, especially where there is a major producer in a particular region. My hon. Friend will be aware that we have established an industry forum to help the supply chain in exactly that situation, so that productivity can be improved and the quality of the product raised. By developing best practice, we can offer new opportunities to companies and businesses.

Mr. Alasdair Morgan: With regard to mortgage interest rates, does the Minister agree that the best guarantee of competition in that sector is the existence of a thriving mutual building society sector? Will he therefore undertake to have a word with his right hon. Friend the Chancellor to see whether something can be done to stop so many building societies having to spend such an inordinate amount of management time fighting off the attentions of a tiny bunch of predator carpetbagger members, who have no interest in lowering interest rates, but are simply out to make a fast buck?

Mr. Byers: I know that that sector is always being actively considered within the Treasury, to make sure that the interests of the wider community are served.

Mr. Dale Campbell-Savours: As one who was formerly an entrepreneur, may I tell my right hon. Friend that I believe that the package for enterprise is excellent? It addresses many of the issues that small business men bring to me in my constituency. Can my right hon. Friend give me an assurance that when an examination is made of the bankruptcy laws—I understand that he may have to make a statement on them in the next month—that will not lead to an increase in the number of phoenix company operations being set up, such as the Tanning Shop or Cabouchon jewellery, or all the others that we know about? I seek that assurance because many of us know of phoenix operations in our constituencies.

Mr. Byers: My hon. Friend raises an important point. There are two categories of people that we are trying to identify legally, so that we can separate them. One type of person is the responsible risk-taker, who has an idea, puts up his own money, tries hard but fails. The other category is the one to which my hon. Friend referred—

people who have nothing but contempt for their creditors and will exploit limited liability to its full extent. We must bear down as hard as we can on those people, while recognising that responsible risk-takers need some degree of protection so that they will not have to live with the stigma of failure for the rest of their lives.
The review that I have set in train will consider whether we can make that distinction. However, I assure my hon. Friend that we would not bring forward proposals which would allow rogue directors who have contempt for their creditors to escape the full force of the law. That law needs to be applied and we should give a clear message that that will continue to be the case.

Mr. Tony Baldry: There is a lot of detail in the Secretary of State's statement. I think that he used the word "unprecedented" with regard to a document that he was publishing containing the names and, I presume, the telephone numbers, of officials, so that members of the general public can speak directly to them. Presumably, the right hon. Gentleman will have no objection if hon. Members who take a particular interest in trade and industry matters, such as members of the Select Committee on Trade and Industry, also avail themselves of the chance to talk directly to those officials on the policy issues raised in the document.

Mr. Byers: I have no problem with that. Those officials also have an e-mail address, so if the hon. Gentleman has that facility that is another way in which he can communicate with them.

Mr. Michael Clapham: I welcome my right hon. Friend's statement. Yesterday, together with other colleagues, I met representatives of the Sheffield branch of the Engineering Employers Federation to discuss the problems that they faced. They told me that they need assistance in establishing a conduit with the local universities in order to transfer technology. Will my right hon. Friend consider what measures he can introduce or assist with to establish a network throughout the UK to transfer technology from universities to industry?

Mr. Byers: In due course, we shall be announcing funding allocations through our innovation budget, and I assure my hon. Friend that one area which will have our considerable attention will be the way in which ideas that are developed in universities can be exploited in the private sector to develop businesses as successfully as possible. If the group to which my hon. Friend referred would like to contact the Department, I am sure that we could give advice on how to facilitate such a dialogue with the local university sector. Over the years, Britain has been weak in that area, and we need to change our whole culture in terms of accessing ideas and innovation in the university sector for the benefit of all our people and for business generally.

Mr. Andrew Lansley: Will the Secretary of State explain why, in his references to competition policy, he did not mention the implementation of the Competition Act 1998, given the importance which his predecessors attach to that? Is it because the Director General of Fair Trading and his office are having the difficulty which my right hon. Friend


the Member for Wokingham (Mr. Redwood) and others predicted about the implementation of those measures in practice?
With regard to mergers policy, will the Secretary of State simply admit that he has had to propose an independent scrutiny of mergers decisions simply because, since May 1997, he and his predecessors have let mergers policy, which was governed by the Tebbit doctrine on a predictable basis, turn into a policy that has become unpredictable, causing difficulty to the City and to business?

Mr. Byers: The reality is that every merger application must be dealt with on its merits. Since I have been in post, no decision that I have taken on such matters will have come as any surprise to any informed commentator. If the hon. Gentleman has examples, I should be grateful if he would give them to me.
The director general has not drawn any particular problems to my attention. I met him only a couple of weeks ago and he felt that he had the resources to ensure that the Competition Act was implemented fairly and effectively.

Mr. Barry Sheerman: I congratulate my right hon. Friend on his statement, particularly its emphasis on the knowledge-driven economy. All who are interested in the area know that that economy has no respect for the divisions of Departments of State. Is he aware that one of the most refreshing things about the statement is that it has started vigorously to break down those barriers that we had to put up with for 18 years, where the Department of Trade and Industry would not talk to the Treasury and the Treasury and the DTI would not talk to the Department for Education and Employment? It is refreshing that the Government are breaking down those barriers, resulting in a co-operative effort across all Departments of State to get the knowledge-driven economy really moving.

Mr. Byers: I am delighted to confirm that. The Chancellor's Budget statement yesterday revealed clearly the extent to which we have co-operated across the Government to ensure that the Budget meets the needs of a range of different people. Today's statement and subsequent statements will do the same.
It would be a mistake not to record the valuable role that my hon. Friend has played over the years in breaking down barriers, particularly between higher education and the business sector, to develop innovation and enterprise, especially in his own region, but also throughout the country. Many of the ideas that we have introduced today are built on ideas that he has advanced in the past few years.

Mr. John Bercow: Given the Secretary of State's statement that the creation of wealth is now more important than its distribution, can he explain why, in their first 22 months, his Government have introduced no fewer than 2,400 additional regulations, which adversely impact on business, and removed only 20?

Why has he made no proposals today that would reverse that tide of nanny state interference in the affairs of British business?

Mr. Byers: I would warn the hon. Gentleman to be very careful about his reference to regulations. In their last year in power, the Government whom he would have supported introduced 3,500 regulations compared with the 2,300 to which he referred. I am afraid that we are way behind, but that is not a target that we want to achieve.

Mr. Harry Cohen: I congratulate my right hon. Friend on his statement and I welcome the arrangements that he has announced on mortgages. Will he extend them slightly so that endowment policies associated with mortgages are looked at so customers using those financial services obtain clarity?

Mr. Byers: I am pleased to be able to clarify my comments and reassure my hon. Friend that today's announcement covers mortgages and other credit arrangements, including endowment policies. People will obtain clarity and know exactly what they are entering into when they make one of the largest investment decisions of their lives.

Mrs. Louise Ellman: I welcome the Secretary of State's practical commitment to enterprise and his promise to tackle one aspect of fuel poverty. Will he explain in more detail how funds from his Department will be made available to RDAs so that venture capital funds or other funds can meet opportunities that have been identified in the regions? Can he give us any further information on how he intends to tackle fuel poverty in a direct and meaningful manner?

Mr. Byers: The relationship between the RDAs and the new Small Business Service is one of the issues to which we will have to give careful attention. We do not want duplication, but we want bodies to work together and the activities in which they are both involved to complement each other.
We can do many things about fuel poverty and we will be asking the energy regulator to draw up in his response a social action plan that considers how energy regulation will work. We are also enabling the regulator to extend his consideration to include people on low incomes. Today's announcement about standing charges could make a real difference to many people on low incomes because the proportion of their household expenditure spent on fuel is three and a half times that of people on average incomes. Fuel poverty is a real problem that needs to be tackled; we are not walking away from it and the steps that we have announced today will begin to make a real difference.

Mr. Brian White: Today's statement and the consultation paper on e-commerce published last week will be widely welcomed, but my right hon. Friend will know that the skills shortage in respect of information technology staff and the need for the infrastructure on which the knowledge-based economy must be built have been


forgotten in the past. It is important that both those aspects are addressed, so will he elaborate on how they will be covered?

Mr. Byers: It would be a mistake to deny that there is a growing shortage of skills, which must be tackled. I am working closely with my right hon. Friend the Secretary of State for Education and Employment to establish—with the help of the skills task force set up by my right hon. Friend—how we can drive through the skills agenda.
This is one of the issues that have been neglected over the years, and we are now paying the price for that neglect. In the days following the Budget, however, announcements will be made showing that we are serious about tackling the problems.

Mr. Tam Dalyell: What concrete measures are available to stimulate the flow of scientists and engineers into industry? That was a reference to my right hon. Friend's statement.

Mr. Byers: I know that my hon. Friend takes a close interest in these matters. He will be pleased to learn that we are developing what we call the teaching company scheme, which provides for a genuine partnership between scientists in industry and higher education. We are also considering ways of encouraging children, during their school lives, to see science and the development of science as more exciting than it is traditionally presented as being.
We believe that a number of proposals in the Department—some have yet to be announced—will reflect the importance of science to our country, and to the scientific community. That is why, before the end of this year, we shall present a strategy showing clearly how we intend to use the science skills that we have here, in the United Kingdom, to the best effect. Science is a talent—a resource—that has been under-utilised, and we want to do all that we can to remedy that.

Mr. Geraint Davies: Does my right hon. Friend agree that the most powerful weapon that we can use to combat uncompetitive pricing in various markets is probably the euro? Given his enthusiasm for electronic commerce, which I share—and, indeed, his enthusiasm for consumer empowerment—will my right hon. Friend encourage the publication of relative pricing across Europe in the electronic and other media, in order to empower consumers, bring about competitive markets and create more prosperity?

Hon. Members: The answer is yes.

Mr. Byers: Thank you.
Consumers do have an option in relation to mortgages, which are now being offered in the single currency. We announced today, in our paper on mortgages, that information will be available to those who are thinking of taking out a mortgage in the single currency, showing clearly how such an arrangement would operate in comparison with mortgage in sterling. Consumers will have a genuine choice. We are moving in that direction— certainly on mortgages.

Points of Order

Mr. Anthony Steen: On a point of order, Madam Speaker. I have given your office notice of it.
I seek your advice, Madam Speaker, about an irregularity that occurred in the European Scrutiny Committee on 10 February. I do not know whether this is a matter for you or for the Select Committee on Standards and Privileges, or whether we should just shrug our shoulders and say, "Well, ministerial standards have declined, and we must just accept that."
As hon. Members know, when Ministers give evidence to Select Committees, officials provide members of those Committees with briefs containing a list of questions that the Committee concerned may think it appropriate for them to ask. On 10 February Lord Donoughue, the Minister responsible for fanning and food, was giving evidence to the Committee in public. At one point, he hinted that he was aware of the questions that were to follow. When I challenged him, he implied that it was impertinent of me to suggest that there had been any impropriety.
Subsequently, the Chairman of the Committee, the hon. Member for Clydesdale (Mr. Hood)—whom I have given notice of my point of order—instigated an inquiry that resulted in the discovery that there had been collusion between Committee officials and officials of the Ministry of Agriculture, Fisheries and Food. In short, a question had been leaked.
I want to make it plain that I am making no criticism of the hon. Member for Clydesdale, who conducted himself with his usual propriety; nor do I criticise the officials, who, if I may say so, made an error of judgment. The Minister, however, was involved in a cover-up that requires further investigation. I should be grateful, Madam Speaker, if you could advise me on how we can best proceed.

Several hon. Members: rose—

Madam Speaker: I am delighted to do so. A question has been put to me by the hon. Member for Totnes (Mr. Steen), but two other hon. Members seem to want to raise points of order. I am a very tolerant Speaker and I shall listen to them, provided that they are not long and I am able to deal with them

Mr. Michael Trend: Further to that point of order, Madam Speaker. I was at the Committee to which my hon. Friend the Member for Totnes (Mr. Steen) referred. Indeed, I was sitting behind the Minister and able to observe over his shoulder that he had not only the questions, but the answers.
I have served with great pleasure on the Select Committee and enjoyed the interchange between Members of Parliament and Ministers, but if Ministers come to Select Committees with not just the questions, but the answers, it makes a mockery of the whole Select Committee procedure. All Members of Parliament might


as well engage just in correspondence with the relevant departmental officials, for all the good that having Ministers before us would do.

Mr. Dale Campbell-Savours: On a point of order, Madam Speaker.

Madam Speaker: No. I have a point of order already. I am very capable of dealing with the matter. I just want to listen to what is being said.

Mr. William Cash: Further to that point of order, Madam Speaker. I have been on that European Select Committee, now the European Scrutiny Committee, for about 14 years. I have never seen such an event. What concerns me is that, on yesterday's "Today" programme, one of the ex-Clerks of the Committee—I think that his name is Philip Hensher—suggested that it was by no means an unusual event.
If it were true that, in other Select Committees, Clerks of the Committee, for whatever reason, were supplying Ministers in advance with the questions that were being asked, it would undermine the democratic accountability of those Committees. If it were prevalent, that would not only put the democratic accountability of the Committees at risk, but could cause grave doubts as to whether the claims that we make for them should be so great.

Mr. Martin O'Neill: Further to that point of order, Madam Speaker. I make two points as the Chairman of a Select Committee. First, I have never found it possible to ensure that any questions are asked, or not asked, by members of the Committee.
Secondly, to ensure that well-briefed Ministers come before us, it is not unreasonable for Committees to identify the areas of concern that might arise. That is totally different from providing crib sheets for Ministers, and I do not think that that has happened, even in the case of the European Scrutiny Committee.

Mr. Jimmy Hood: Further to that point of order, Madam Speaker.

Mr. Cash: Further to that point of order, Madam Speaker.

Madam Speaker: Order. We are not having a debate on the matter. I am ready to respond to the point of order and have been since it was first raised, but I see that the hon. Member for Clydesdale (Mr. Hood), who is Chairman of the Committee, is seeking to raise a point of order and I shall listen to him.

Mr. Hood: Further to that point of order, Madam Speaker. That matter came before our Committee. It has considered it and made a decision on it. It was acceptable to the hon. Member for Totnes (Mr. Steen), who has raised the point of order. I cannot for the life of me understand why he has raised it with you today.

Mr. Cash: Further to that point of order, Madam Speaker.

Madam Speaker: How many more points of order will the hon. Gentleman try to make? He is like a yo-yo.

Mr. Cash: I raise the following point because of the remarks by the Chairman of the Select Committee on

Trade and Industry, the hon. Member for Ochil (Mr. O'Neill), for whom I have the greatest respect. It would be a matter of grave concern if the House accepted that Ministers should have advance warning of questions that were to be asked. If one thinks about it, it gives them an opportunity to arrange the answers to questions, which, in relation to the procedures in those Committees, gives them an unfair advantage.
I ask you, Madam Speaker—it is the main burden of my further point of order—to institute an inquiry within the Clerks Department to ensure that those things are done properly, in line with the spirit, as well as the actual terms, of the Standing Orders setting them up.

Madam Speaker: The hon. Member for Totnes (Mr. Steen), who raised the original point of order with me, asked which Committee was responsible for these matters. I think that he knows full well that it is the European Scrutiny Committee because Committees in the House regulate their own affairs.
In the case of the European Scrutiny Committee, I understand that an explanation had already been given to the Committee, of which the hon. Member for Totnes is himself a member, and that the Committee unanimously accepted the explanation. Moreover, there is a written question on the Order Paper on the issue, which has been tabled by the hon. Member for Windsor (Mr. Trend).
The hon. Member for Totnes, knowing full well, as a long-standing Member of the House, how we deal with such a matter, which has already been to the Committee, should not have brought it up on the Floor of the House.

Mr. Peter Bottomley: On a point of order, Madam Speaker. May I ask that you, as Speaker, consult with the Solicitor-General to determine whether his statements in open court this week—in the case involving Mr. Al Fayed, Neil Hamilton and The Guardian—might be placed in the Library? I am not trying to raise the issues of the case, but it might be useful if a statement that has been made that is relevant to Parliament is available to hon. Members.

Madam Speaker: At this stage, the House might well wish to know that I have requested the Law Officers to intervene in the case on behalf of the House, to assert the House's right that its proceedings should not—to quote the Bill of Rights—be
impeached or questioned in any court or place out of Parliament".
In response to the hon. Gentleman's point of order, I shall be happy to do what I can to place the arguments advanced on behalf of the House in the Library just as soon as it is proper to do so.

Mr. Christopher Leslie: On a point of order, Madam Speaker; I seek your guidance. This morning, the Select Committee on Standards and Privileges published its report into a complaint that I made about the right hon. Member for Horsham (Mr. Maude), and concluded that he breached several rules of the House. Madam Speaker, I wonder if you have had notice from the right hon. Gentleman, who is in the Chamber, that he will today make a personal statement of apology?

Madam Speaker: I have not yet seen the Committee's report and cannot respond to the hon. Member.

ROYAL ASSENT

Madam Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:
Road Traffic (NHS Charges) Act 1999.

Lifelong Learning (Participation and Entitlement)

Mr. David Chaytor: I beg to move,
That leave be given to bring in a Bill to establish an entitlement to paid educational leave for people in employment; to secure comparable treatment for full and part-time students in institutions of further and higher education; and for connected purposes.
It is particularly appropriate that I should be promoting my Bill today after both today's statement by my right hon. Friend the Secretary of State for Trade and Industry, which dealt with the knowledge-based economy, and the various measures on lifelong learning announced in yesterday's Budget. The Bill is concerned with the means by which the Government's vision of an inclusive lifelong society might be implemented.
The Government should be proud that, in less than two years, they have done more to move lifelong learning up the educational and political agenda than the previous Government did in almost 20 years. Publication of the major reports by Baroness Kennedy and Professor Fryer, publication of "The learning Age" Green Paper, launch of individual learning accounts and the university for industry, the significant increase in funding to colleges, universities and local authorities after the comprehensive spending review, and yesterday's announcement on development of new learning centres across the country all show that the Government are serious about attaining their objectives.
The danger of any such expansion in education is that newly allocated resources will be used primarily to reproduce more of what we already had, and that those who traditionally have benefited from investment in education beyond age 18 will continue to receive the lion's share of new investment. That is the legacy of the highly selective and highly elitist education system that we inherited.
My Bill therefore focuses on the educational entitlement that all young people and adults should have if we are to achieve the widening of participation in lifelong learning that is at the heart of the Government's strategy.
The chronic educational under-achievement of our people is well documented. We compare badly with our major competitors: fewer children in pre-school education; poorer attainment in literacy, maths and science; fewer young people staying on after 16; fewer students in university; and fewer workers with higher-level vocational qualifications. The cycle of underachievement has been endemic for over a century, but I am delighted that my Government are now getting to grips with the root causes of the problems—in their drive to improve pre-school education, to force up standards in our primary and secondary schools, and to increase the number of places in our colleges and universities.
The vast majority of new learners benefiting from the Government's new initiatives will be studying part time. However, the financing of education—both in allocations to institutions and in the nature and level of student support—is based on the assumption that the normal mode of study is full time. My Bill calls for an end to this discrimination and an equalisation of treatment for part-time students.
There are many different kinds of part-time student. A woman bringing up young children by herself studies at home to complete the GCSEs that she did not complete at school. An older man working 50 or 60 hours a week knows that he faces redundancy if he does not learn to use the computers that are now transforming his industry. Thousands of adults trapped in dead-end jobs know that improving their qualifications is the key to a better life for themselves and their children.
Those part-time students are learning in circumstances that are, by definition, more difficult than they would be if they were able to study full time. They are working, sometimes in two or more part-time jobs, or caring for children or elderly relatives, or coping with their own or a relative's disability. They have never had a maintenance grant, as full-time undergraduates have. They have never had a statutory right to free tuition fees, as full time undergraduates have. They are not usually eligible for discretionary awards from local authorities or for access funds from colleges and universities.
If the Government are to complete the revolution in student finance that started last year, they must now move to end those anomalies. That is why the first part of my Bill calls for equality of treatment for part-time students. That means equality in the way in which institutions are funded. We still find that colleges where a majority of students are part time are funded less generously than school sixth forms and universities, where a majority of students study full time, even where the colleges deliver comparable courses. It also means equality in levels of student support, as most part-time students are still not eligible for student loans. Amendment of the Student Support Regulations 1998 to grant eligibility for student loans to part-time students in colleges is one of the most effective means of widening participation that the Government could adopt.
The second part of the Bill is more specifically concerned with vocational training. For the best part of 20 years, Britain's policy on vocational training has been a shambles. We abolished the old apprenticeships system and now find that we have had to reinvent it under the name of modern apprenticeships. We abolished the industrial training levy and found that employers were not prepared to train workers and lose them to other companies. We created Investors in People and then found that the people who received the investment were in many cases the same people who had always received investment.
Until recently, British companies still invested little more than one tenth of the average amount invested in training by companies in France, Germany and Japan. Is it any surprise that we have so few workers with NVQ level 3 qualifications? Is it any surprise that we have a productivity gap? Is it any surprise that, not to put too fine a point on it, it is BMW considering the future of Longbridge and not Rover considering the future of car plants in Germany?
So the second part of my Bill calls for a national scheme of paid educational leave for employees. Many companies large and small already invest heavily in training and there is growing understanding of the importance of that investment. However, the greatest part of that investment is targeted at those in the boardroom,

those who are upwardly mobile, and those who are already highly skilled in professional jobs. Such professionals have always had paid educational leave. The 1997 labour force survey, for example, suggests that graduates receive five times as much continuing training as non-graduates. No one would wish to deny them those opportunities, and my Bill would simply extend the opportunities that are taken for granted by professionals to workers who left school with few, if any, qualifications; to workers in whose family there is no tradition of education or training beyond school age; to workers who cannot help their children succeed in school because they do not have the basic skills or the necessary confidence.
For many millions of people, it is a question not simply of being the first in a thousand generations to go to university but of being the first in a thousand generations to get a few days training a year. Let us be under no illusions about the scale of the problem that we have inherited. There are 13 million people in jobs with no access to training. More than a quarter of adult workers have literacy skills that are so poor that they cannot read basic instructions. Almost one third of the work force have no recognised vocational qualification.
Finding the means whereby unskilled workers with little job security and no prospect of upward mobility can be enabled to develop transferable vocational skills is the biggest challenge for our lifelong learning strategy. That is the key to their economic survival in the knowledge-based economy and the means by which they can raise the educational aspirations of their children. The Teaching and Higher Education Act 1998 introduced that entitlement for young workers. The next step should be to extend the entitlement to all workers.
Belgium, Norway, Italy, France and Sweden already have national schemes of paid educational leave. Italy guarantees 150 hours per year. Belgium guarantees 240 hours per year. In Britain, the workers with the greatest need have always had the least access to training.
The United Kingdom supported the principle of paid educational leave 25 years ago by signing the 1974 convention of the International Labour Organisation. Last year, we reiterated our support for the principle by signing the European social chapter, article 15 of which calls for national schemes of paid educational leave.
The Government are to be congratulated on signing the social chapter so speedily after coming to power and on ensuring that many of its provisions are enshrined in domestic law, but if we are serious about widening participation in education and training, we must urgently consider the implications of article 15 and incorporate its principles into our lifelong learning strategy.
The inequalities that disfigure our society have been created mainly by a divisive system of education which has been more concerned with reproducing a narrow social elite than developing the skills of all our people. In the 21st century, no nation will be able to afford to neglect—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Chaytor, Mr. Dennis Turner, Mr. Allan Rogers, Mr. Harry Barnes, Mr. Michael J. Foster, Ms Jenny Jones, Mr. Kelvin Hopkins, Mr. Gareth R. Thomas, Mr. Derek Twigg and Mr. Phil Willis.

LIFELONG LEARNING (PARTICIPATION AND ENTITLEMENT)

Mr. David Chaytor accordingly presented a Bill to establish an entitlement to paid educational leave for people in employment; to secure comparable treatment for full and part-time students in institutions of further and higher education; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 23 April, and to be printed [Bill 59].

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

TREATMENT OF END OF LIFE VEHICLES

That this House endorses the Government's view that the draft Directive on end of life vehicles, European Union Document No. 11034/97, rightly seeks to achieve important environmental improvements; and supports the Government's intention to agree a Common Position on this draft Directive at the next Environment Council on 11th March.—[Mr. Betts.]

The House divided: Ayes 266, Noes 107.

Division No. 95]
[4.38 pm


AYES


Adams, Mrs Irene (Paisley N)
Campbell, Ronnie (Blyth V)


Ainger, Nick
Campbell-Savours, Dale


Ainsworth, Robert (Cov'try NE)
Cann, Jamie


Allan, Richard
Cawsey, Ian


Allen, Graham
Chaytor, David


Anderson, Janet (Rossendale)
Chidgey, David


Armstrong, Ms Hilary
Church, Ms Judith


Ashton, Joe
Clapham, Michael


Atkins, Charlotte
Clarke, Charles (Norwich S)


Austin, John
Clarke, Eric (Midlothian)


Ballard, Jackie
Clarke, Rt Hon Tom (Coatbridge)


Barron, Kevin
Clarke, Tony (Northampton S)


Battle, John
Clelland, David


Bayley, Hugh
Clwyd, Ann


Beard, Nigel
Coaker, Vernon


Beckett, Rt Hon Mrs Margaret
Cohen, Harry


Begg, Miss Anne
Cooper, Yvette


Beggs, Roy
Corston, Ms Jean


Beith, Rt Hon A J
Cotter, Brian


Benn, Rt Hon Tony
Cousins, Jim


Bennett, Andrew F
Cox, Tom


Benton, Joe
Crausby, David


Bermingham, Gerald
Cryer, Mrs Ann (Keighley)


Berry, Roger
Cryer, John (Hornchurch)


Betts, Clive
Cummings, John


Blackman, Liz
Cunningham, Jim (Cov'try S)


Blair, Rt Hon Tony
Curtis-Thomas, Mrs Claire


Blears, Ms Hazel
Dalyell, Tam


Blizzard, Bob
Darvill, Keith


Boateng, Paul
Davies, Rt Hon Denzil (Llanelli)


Bradley, Keith (Withington)
Davies, Geraint (Croydon C)


Bradley, Peter (The Wrekin)
Denham, John


Bradshaw, Ben
Dobbin, Jim


Brake, Tom
Donaldson, Jeffrey


Brand, Dr Peter
Dowd, Jim


Breed, Colin
Drew, David


Brinton, Mrs Helen
Drown, Ms Julia


Brown, Rt Hon Gordon (Dunfermline E)
Eagle, Maria (L'pool Garston)



Edwards, Huw


Bruce, Malcolm (Gordon)
Efford, Clive


Burden, Richard
Ellman, Mrs Louise


Burnett, John
Ennis, Jeff


Burstow, Paul
Fearn, Ronnie


Byers, Rt Hon Stephen
Fitzpatrick, Jim


Campbell, Menzies (NE Fife)
Fitzsimons, Lorna





Flynn, Paul
Mackinlay, Andrew


Follett, Barbara
McNulty, Tony


Forsythe, Clifford
MacShane, Denis


Foster, Rt Hon Derek
Mactaggart, Fiona


Foster, Don (Bath)
McWalter, Tony


Foster, Michael Jabez (Hastings)
McWilliam, John


Foster, Michael J (Worcester)
Marshall, David (Shettleston)


Foulkes, George
Marshall, Jim (Leicester S)


Fyfe, Maria
Martlew, Eric


Gapes, Mike
Merron, Gillian


Gardiner, Barry
Michie, Bill (Shef'ld Heeley)


George, Andrew (St Ives)
Michie, Mrs Ray (Argyll & Bute)


George, Bruce (Walsall S)
Milburn, Rt Hon Alan


Gerrard, Neil
Miller, Andrew


Gibson, Dr Ian
Moran, Ms Margaret


Gilroy, Mrs Linda
Morgan, Rhodri (Cardiff W)


Goggins, Paul
Mudie, George


Golding, Mrs Llin
Mullin, Chris


Gordon, Mrs Eileen
Murphy, Jim (Eastwood)


Gorrie, Donald
Oaten, Mark


Griffiths, Jane (Reading E)
O'Brien, Bill (Normanton)


Griffiths, Win (Bridgend)
O'Brien, Mike (N Warks)


Grocott, Bruce
Olner, Bill


Grogan, John
O'Neill, Martin


Hall, Mike (Weaver Vale)
Öpik, Lembit


Harris, Dr Evan
Organ, Mrs Diana


Heal, Mrs Sylvia
Pearson, Ian


Hepburn, Stephen
Perham, Ms Linda


Hill, Keith
Pike, Peter L


Hood, Jimmy
Pollard, Kerry


Hopkins, Kelvin
Pound, Stephen


Howarth, Alan (Newport E)
Powell, Sir Raymond


Howarth, George (Knowsley N)
Prentice, Ms Bridget (Lewisham E)


Hughes, Ms Beverley (Stretford)
Prentice, Gordon (Pendle)


Hughes, Kevin (Doncaster N)
Primarolo, Dawn


Iddon, Dr Brian
Prosser, Gwyn


lllsley, Eric
Quin, Rt Hon Ms Joyce


Jackson, Ms Glenda (Hampstead)
Quinn, Lawrie


Jamieson, David
Rammell, Bill


Jenkins, Brian
Rapson, Syd


Johnson, Alan (Hull W & Hessle)
Raynsford, Nick


Johnson, Miss Melanie (Welwyn Hatfield)
Reid, Rt Hon Dr John (Hamilton N)



Rendel, David


Jones, Barry (Alyn & Deeside)
Roche, Mrs Barbara


Jones, Helen (Warrington N)
Rooney, Terry


Jones, Ms Jenny (Wolverh'ton SW)
Ruddock, Joan



Russell, Bob (Colchester)


Jones, Dr Lynne (Selly Oak)
Russell, Ms Christine (Chester)


Jones, Martyn (Clwyd S)
Ryan, Ms Joan


Jones, Nigel (Cheltenham)
Sanders, Adrian


Keeble, Ms Sally
Savidge, Malcolm


Keetch, Paul
Sawford, Phil


Kelly, Ms Ruth
Sedgemore, Brian


Khabra, Piara S
Shaw, Jonathan


Kidney, David
Sheerman, Barry


King, Andy (Rugby & Kenilworth)
Sheldon, Rt Hon Robert


King, Ms Oona (Bethnal Green)
Simpson, Alan (Nottingham S)


Kingham, Ms Tess
Skinner, Dennis


Kumar, Dr Ashok
Smith, John (Glamorgan)


Ladyman, Dr Stephen
Smith, Llew (Blaenau Gwent)


Leslie, Christopher
Smith, Sir Robert (W Ab'd'ns)


Levitt, Tom
Soley, Clive


Lewis, Ivan (Bury S)
Squire, Ms Rachel


Linton, Martin
Starkey, Dr Phyllis


Livingstone, Ken
Stevenson, George


Lloyd, Tony (Manchester C)
Stewart, David (Inverness E)


Lock, David
Stewart, Ian (Eccles)


Love, Andrew
Stoate, Dr Howard


McAvoy, Thomas
Stringer, Graham


McCabe, Steve
Sutcliffe, Gerry


McCartney, Ian (Makerfield)
Swinney, John


McDonagh, Siobhain
Taylor, Rt Hon Mrs Ann (Dewsbury)


McDonnell, John



McGrady, Eddie
Taylor, Ms Dari (Stockton S)


McGuire, Mrs Anne
Temple-Morris, Peter


McIsaac, Shona
Thomas, Gareth (Clwyd W)






Thomas, Gareth R (Harrow W)
White, Brian


Timms, Stephen
Wicks, Malcolm


Tipping, Paddy
Williams, Rt Hon Alan (Swansea W)


Todd, Mark



Touhig, Don
Williams, Alan W (E Carmarthen)


Turner, Dennis (Wolverh'ton SE)
Willis, Phil


Twigg, Derek (Halton)
Wills, Michael



Winnick, David


Twigg, Stephen (Enfield)
Winterton, Ms Rosie (Doncaster C)


Tyler, Paul
Wise, Audrey


Vaz, Keith
Worthington, Tony


Vis, Dr Rudi
Wright, Dr Tony (Cannock)


Wallace, James
Wyatt, Derek


Ward, Ms Claire



Watts, David
Tellers for the Ayes:


Webb, Steve
Mr. David Hanson and


Welsh, Andrew
Mr. Greg Pope.




NOES


Ainsworth, Peter (E Surrey)
Collins, Tim


Amess, David
Cormack, Sir Patrick


Ancram, Rt Hon Michael
Cran, James


Arbuthnot, Rt Hon James
Davis, Rt Hon David (Haltemprice)


Atkinson, Peter (Hexham)
Day, Stephen


Baldry, Tony
Duncan Smith, Iain


Bercow, John
Evans, Nigel


Beresford, Sir Paul
Faber, David


Blunt, Crispin
Fabricant, Michael


Boswell, Tim
Fallon, Michael


Bottomley, Peter (Worthing W)
Flight, Howard


Bottomley, Rt Hon Mrs Virginia
Fowler, Rt Hon Sir Norman


Brooke, Rt Hon Peter
Fox, Dr Liam


Browning, Mrs Angela
Fraser, Christopher


Campbell, Menzies (NE Fife)
Gale, Roger


Cash, William
Garnier, Edward


Chope, Christopher
Gibb, Nick


Clappison, James
Gillan, Mrs Cheryl


Clark, Dr Michael (Rayleigh)
Gorman, Mrs Teresa


Clifton-Brown, Geoffrey
Gray, James





Grieve, Dominic
Paice, James


Hague, Rt Hon William
Paterson, Owen


Hamilton, Rt Hon Sir Archie
Prior, David


Hammond, Philip
Redwood, Rt Hon John


Hayes, John
Robathan, Andrew


Heald, Oliver
Rowe, Andrew (Faversham)


Heathcoat-Amory, Rt Hon David
Ruffley, David


Hogg, Rt Hon Douglas
St Aubyn, Nick


Horam, John
Shephard, Rt Hon Mrs Gillian


Howard, Rt Hon Michael
Simpson, Keith (Mid-Norfolk)


Howarth, Gerald (Aldershot)
Spring, Richard


Jenkin, Bernard
Steen, Anthony


Johnson Smith, Rt Hon Sir Geoffrey 
Streeter, Gary



Swayne, Desmond


Key, Robert
Syms, Robert


King, Rt Hon Tom (Bridgwater)
Tapsell, Sir Peter


Laing, Mrs Eleanor
Taylor, John M (Solihull)


Lait, Mrs Jacqui
Taylor, Sir Teddy


Lansley, Andrew
Townend, John


Letwin, Oliver
Tredinnick, David


Lewis, Dr Julian (New Forest E)
Trend, Michael


Lidington, David
Tyrie, Andrew


Lilley, Rt Hon Peter
Walter, Robert


Lloyd, Rt Hon Sir Peter (Fareham)
Waterson, Nigel


Luff, Peter
Wells, Bowen


Lyell, Rt Hon Sir Nicholas
Whitney, Sir Raymond


MacGregor, Rt Hon John
Whittingdale, John


MacKay, Rt Hon Andrew
Widdecombe, Rt Hon Miss Ann


Maclean, Rt Hon David
Willetts, David


McLoughlin, Patrick
Winterton, Nicholas (Macclesfield)


Maples, John
Woodward, Shaun


Maude, Rt Hon Francis
Young, Rt Hon Sir George


May, Mrs Theresa



Nicholls, Patrick
Tellers for the Noes:


Ottaway, Richard
Sir David Madel and


Page, Richard
Mrs. Caroline Spelman.

Question accordingly agreed to.

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [9 March].

AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for varying any rate at which that tax is at any time chargeable; or
(d) for any relief, other than a relief which—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.—[Mr. Gordon Brown.]

Question again proposed.

Orders of the Day — Budget Resolutions and Economic Situation

[Relevant documents: The Second Report from the Treasury Committee, Session 1998–99, on the World Economy and the Pre-Budget Report (HC 91-I), and the Fourth Report from the Environmental Audit Committee, Session 1998–99, on the Pre-Budget Report (HC 93).]

Mr. John Redwood: I rise to oppose this Budget—a Budget of smoke and mirrors, a Budget with many a sting in the small print and a Budget which announced a little good news and left out a lot of bad news, which came in the press releases that followed. This is the third Budget of this Chancellor and this Government: third time unlucky for many. It is third time unlucky for motorists, for small business people, for industry and for most of the people who make the wealth and generate the jobs in our country.
The Government came to power promising education, education, education as their three priorities. Three Budgets later, we know their true priority: it is tax, tax, tax. There are stealth taxes and wealth taxes, income taxes and spending taxes, business taxes and jobs taxes. After the Government have put taxes up, they dare to say that they have cut them—which is misleading the House on a great scale. Meanwhile, the hospitals are short of nurses and doctors, and schools find it difficult to recruit and retain good teachers.
This is a Government of tax and waste, not tax and spend. They take more money from us so that Ministers can fly Concorde more often; they raise taxes so that we can employ more politicians throughout the country and have more quangos; and they spend massive sums on a welfare-to-work programme that simply does not work, as my right hon. and hon. Friends will demonstrate in future debates.
This is a Government who hire more spin doctors to tell us why they cannot afford more medical doctors. This Government are the nation's pickpocket, creeping up at the dead of Budget to rifle your wallet or purse. Saving for a pension? Not without a tax from this Chancellor. Making profits in your company? Not without paying a lot more corporation tax and then being asked to thank the Government for cutting the rate. Driving your car? Not without being clobbered by the Chancellor every time you go out of the garage, and often when you do not.
This Budget continues the great Labour tradition of tax and waste. For business, there is extra vehicle excise duty [Interruption.] I see Ministers roaring their heads off. They obviously do not know what measures were in their three Budgets. They do not know how much damage is being done to industry. They have no idea of all the tax increases that the Chancellor has squirrelled away in the paperwork. It is a pity that they do not read the stuff, but we do because we need to represent the case to British business.
Vehicle excise duty, a £25 million increase; capital gains on company sales, a £40 million increase—

Mr. Tony Baldry: Is not laughter from Treasury Ministers particularly perverse at a time when the newspapers are announcing even more job losses in the manufacturing sector?

Mr. Redwood: My hon. Friend anticipates my argument only too well. If only the Government could anticipate it, heed it and change their policy.
This Budget contains changes to the value added tax rules—a £70 million increase; changes in VAT group treatment—a £5 million increase; and an end to VAT exemption on financing—a £95 million increase. I see that the Chancellor is trying to find those figures, so he obviously does not know about them either. For taxation of reverse premiums, there is a £20 million increase. Stamp duty is increasing; I wonder whether that is the Chancellor's revenge on the right hon. Member for Hartlepool (Mr. Mandelson). He reads that the right hon. Gentleman is about to buy a flat for a little over half a million pounds, and up goes the stamp duty. Perhaps we should call it Peter's pence from now on.
There are increased car taxes and fuel duties. The Chancellor says in his "Budget for business" that some taxes will go down next year, and he is right—I have found two of them: a £10 million reduction in value added tax on "certain supplies", although they are not specified; and £5 million in tax relief for employer-loaned computers. Whoopee! That will make a real difference to business when it is set against the £25,000 million in extra taxes from the Chancellor's first two Budgets and the substantial increases in this year's. I assume that the borrowed computers are needed to help people to work out all the stealth taxes that they and their businesses must pay in the financial year 1999–2000.
The overall impact next year on British business will be the raising of the tax burden by a substantial amount according to the Chancellor's own figures, as set out in "Budget 99", his own document. There are no overall tax reductions for business next year. There are massive increases from three Budgets—the largest of them from Budgets one and two and smaller further increases in Budget three.
What do the Prime Minister and the Chancellor say about the Budget? The Prime Minister says that it is another Budget to bring an end to boom and bust. That is his favourite soundbite. Out of his limited repertoire of tired and misleading phrases, "bringing an end to boom and bust" is the most overused and misleading.

The Secretary of State for Trade and Industry (Mr. Stephen Byers): To Tory boom and bust.

Mr. Redwood: The Secretary of State is right to say that that is the way in which the Prime Minister chooses to construct his phrase. The Prime Minister repeats it like a music hall line or a comedian's catch phrase. To those in the front line of British industry, it does not seem very funny, however. Industry has been suffering for a year. At the time of the Chancellor's first Budget, I warned of
a treble whammy on profits, investment and jobs in British manufacturing … the higher exchange rate, which throttles the prospects of exporters in continental markets; the higher interest rates which have already occurred—undoubtedly there will be more …—and higher taxes".—[Official Report, 4 July 1997; Vol. 297, c. 581.]
As we know, there was more. If the Opposition could foresee all that in July 1997, why could not the Government? Why did they blunder and plunder on?
Was the Secretary of State for Trade and Industry persuaded to make today's silly statement, which had no new content, in order to delay the Budget debate beyond the normal time for the early evening news and because he did not wish to hear the truth about the plight of manufacturing? Did he also wish to delay the debate so long that I might have to be torn away to the shadow Cabinet, where my right hon. and hon. Friends are now? Or was the statement simply an unfortunate slip of his memory? Had he forgotten that all that he announced today had been announced many times before?
Why does the Secretary of State not care about the string of factory closures and industrial job losses that are being left in his wake? Why will he not come to the House to make a statement about what he intends to do about that? The real issue facing us is manufacturing collapse and factory closures, not the silly, trivial matters that the right hon. Gentleman chose to mention or policies that he has announced many times before.

Mr. John Bercow: Is my right hon. Friend aware that he and my right hon. Friend the Member for Horsham (Mr. Maude), the shadow Chancellor, have approximately 20 times more experience of the private sector of the British economy than the Chancellor and the Secretary of State for Trade and Industry?

Mr. Redwood: My hon. Friend's calculation is likely to be correct; it would not be difficult to have more industrial and commercial experience than the Chancellor and the Secretary of State for Trade and Industry.

The Minister for Energy and Industry (Mr. John Battle): You obviously learned nothing from it.

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The Minister for Energy and Industry must not shout across the Chamber. He should know better.

Mr. Redwood: I am grateful to you, Mr. Deputy Speaker.
Why has the Budget done nothing to correct problems for manufacturing industry? It gives no answer to high sterling. It offers no relief from high taxes. It contains only more increases in the high costs facing industry.
When the Prime Minister says that he has abolished the cycle of boom and bust, does he realise that manufacturing is in recession? For a long time, the Government said that output had not fallen for two quarters. Now that it has fallen for many industrial companies for longer than that, we are told grudgingly that it is a technical recession. There is nothing technical about it. It means job losses for tens of thousands of industrial workers. It means many closed factories. It means financial ruin for some who have committed their cash and effort to making things in Britain.
Is the Prime Minister unaware of the job losses and factory closures? When he says that he has abolished the boom-bust cycle, does he mean that industry under Labour will simply stay bust? Is the magic new Labour ingredient in economic policy to be no recovery for industry now that it is down? There is certainly no sign in the Budget of any revival or any hope for the future for those who make things in Britain. There is no big reduction in their tax bills and no promise to influence Europe to reverse the continental countries' large devaluation.
The Prime Minister has as much chance of staying on his trade cycle as he has of persuading me that his policy on the euro is right. He is not merely wobbling on his trade cycle: he, and British industry, have long since fallen off. The Prime Minister may believe in new Labour's circus—as long as the spin doctors turn out the lights, no one will notice that British industry is on the floor. Unfortunately for him, people have noticed. The workers at Cadbury noticed when they got their P45s. The workers of Coats Viyella noticed when they got the sack. The workers in the FII shoe factories noticed when the factories were closed down. Even the Secretary of State for Trade and Industry noticed, and he was forced to go to the north-east with soothing words. Still not a single policy has been introduced that could reverse the industrial rout.

Mr. Martin O'Neill: A number of workers employed by Coats Viyella in my constituency have lost their jobs because Marks and Spencer has decided to switch its production to third-world countries. Does the right hon. Gentleman think that the answer is a reduction in salaries and pay to third-world levels? If not, he should address the issues and tell the House his alternatives.

Mr. Redwood: I have often led debates for the Opposition on that subject and suggested to the Government how they could avert some of the industrial disaster over which they are presiding. If they had a sensible policy on interest rates, sterling, business taxes and regulatory costs, British business would not have been sandbagged as it has by the Government. They have taken too much money out of the hands of manufacturing industry and that is why jobs are being lost.

Mr. Tom King: Sadly, I can add to my right hon. Friend's list. Some 20 per cent. of the work force of St. Regis—which, far from being in a cheap labour industry, is capital-intensive—now face the


prospect of redundancy. That plant in my constituency is highly efficient and has received substantial capital investment.

Mr. Redwood: I am grateful to my right hon. Friend and add my sympathies to his for those workers now threatened with the sack. That is what is happening up and down the country, thanks to the Government.

Mr. Geraint Davies: Are we meant to understand from the right hon. Gentleman's speech that, given the chance, he would reverse the independence of the Bank of England, alongside his intention never to join the euro? In such a situation, long-term interest rates for British industry would rocket, there would be a huge migration of international capital out of the country and the rate of unemployment would escalate.

Mr. Redwood: What an extraordinary statement. The Opposition opposed the independence of the Bank of England because we did not think it was right in the circumstances. How right we were. Interest rates were driven higher than we recommended or proposed and British industry was put into a vice of high sterling, high interest rates, high taxes and high regulatory costs. That is why we are now seeing a disaster.

Mr. Davies: Would the right hon. Gentleman reverse independence?

Mr. Redwood: The hon. Gentleman knows the answer to that question. The Opposition will set out the right remedy for the British economy in the prevailing circumstances in the run-up to the next general election. We cannot do more than oppose a wrong idea at the moment. We opposed independence for the Bank of England and we explained that we did so because it would do great damage to British manufacturing. Our prediction has come true. The Chancellor should admit that he got it wrong, apologise, recognise the damage that he has done and try to do better next time with a different policy.
One would have thought that Ministers would care more because the problems are occurring in their constituencies. My constituency of Wokingham does not have a big problem, because it is a high-tech town which is still doing well. However, there are real problems in the industrial heartlands, which are usually represented by Labour Members, especially those on the Front Bench. In the past six months, unemployment has risen by 101 in the Prime Minister's constituency. He should visit it and find out. Unemployment has gone up by 275 in Hartlepool, the constituency of the recently departed Secretary of State for Trade and Industry. It has gone up by 405 in the constituency of the current Secretary of State for Trade and Industry—a huge number of people out of work while the right hon. Gentleman is on the beat, allegedly looking after the interests of British business, yet he does nothing about it.
Has the Secretary of State read the forecasts in the Red Book? They are not my forecasts. For many months, I have been predicting industrial recession; now the Government have caught up with the Opposition's prediction. The Chancellor tells us that, in 1999, manufacturing output will fall by between 1 and 1.5 per cent. That is a recession and it is a long one. No one thinks that the Chancellor is being too pessimistic—indeed his

forecasts assume that sterling will fall to help manufacturing industry. However, that is not happening at present; the position is becoming worse.
The Budget predicts a further collapse in our trade balance. I remember the present Chancellor fulminating against any increase in the trade deficit under Conservative Governments. However, he does not even mention the matter in his Budget statement; nor is it mentioned by the Secretary of State for Trade and Industry. Exporters find that the going is extremely tough. What does the Chancellor say in the Red Book, although not in his Budget speech?
The deficit in trade in goods and services is forecast to widen to around £ 13¼ billion in 1999".
We are told that net exports will be well down on levels recorded last year. There is to be a balance of payments crisis and a collapse of manufacturing exports; the Chancellor foresees a country awash with imports as workers are thrown on to the dole and people buy goods from abroad—exactly what the hon. Member for Ochil (Mr. O'Neill) tells us is happening in his constituency thanks to the purchasing decisions of Marks and Spencer.
How many people might lose their jobs as a result of the actions of this bungling Chancellor? The trade unions are clear—[Interruption.] The hon. Member for Lincoln (Gillian Merron) should not laugh when the Chancellor is criticised by the trade unions. She should understand that sometimes the trade unions are right and that sometimes she should listen to them. The trade unions are fairly clear, saying:
We estimate that in the year to quarter 4 1999 total employment could fall by 200,000 to 300,000 and almost all the lost jobs will be in manufacturing.
That is quite a forecast, but it is lower than the so-called independent forecast included in the Chancellor's Budget figures, where we learn that the increase in unemployment will be 400,000 as a result of this and previous Budgets.
I wish that I could disagree with the trade union forecasts and tell people all over the country in industrial jobs that things will not be that bad. I want our country to do well and our manufacturing industry to thrive and survive. Unfortunately, the Government's whole strategy rests on people in manufacturing losing their jobs on a grand scale.
The Government tell us that British industry is 20 per cent. behind our continental competitors in productivity. If the Government will do nothing to lower other costs and taxes on business, the reduction in costs will have to come from jobs. Do they really want that? I want the Government to cut other costs and taxes, rather than business having to cut jobs. If the whole of that one-fifth gap in productivity has to be narrowed by losing jobs, the Government are recommending the sacking of 1 million people from the manufacturing areas of this country to bring us into line with Germany. They will not give on the exchange rate, regulatory costs or taxes, so they say that the brunt of the burden of adjustment must fall on jobs. Furthermore, they cannot say that the adjustment will come from rising output, which is what Conservatives would want, because the forecasts are that output will fall as a result of their policies.
To be fairer to the Government, let us be more modest in our assumptions. Let us assume that, this year, the Government want British industry to raise its productivity by only 4 per cent., thus making a small contribution to


bridging the gap that they perceive between us and Germany. We should remember that Germany's productivity will also rise. The 4 per cent. increase in productivity, on top of a 1 per cent. output fall—the lowest end of the Chancellor's range—means that 5 per cent. of jobs in industry must go. That is about 250,000 jobs, just for one year's modest narrowing of the gap that the Government think is all important, and which they think must be narrowed by sacking people rather than by the Government mending their own ways. Our forecast of 250,000 jobs to go in manufacturing is modest compared with the upper level of the trade union forecasts. I fear that it will come true. I wish that the Secretary of State would change his speech, change his policy and prevent it from becoming a reality—for the sake of his constituents, if not for the sake of mine.
What does the Secretary of State bring to the party? He brings a trade war between the European Union and the United States of America. Does he not realise that in a trade war there are absolutely no winners? In this trade war, the loser will once again be British manufacturing— which loses from everything the Government do. The Secretary of State seems to see himself as the samurai of the trade war, but he is instead the kamikaze pilot who mistakes the Scottish borders for New York and ends up destroying great chunks of the cashmere and biscuit industries through his suicidal dive.

Mrs. Angela Browning: Does my right hon. Friend recall the debate about the textile industry that we had in this House at the end of January when we implored the Prime Minister to pick up the telephone that day and talk to the President of the United States in an attempt to resolve the problems of the cashmere industry? It seems that our words went unheeded and that the Government paid very little attention to us.

Mr. Redwood: I am grateful to my hon. Friend. Her advice and that of other right hon. and hon. Members was good and well meant. We do not want this trade war, and we would dearly love the Prime Minister to have enough clout with the President to secure a change in the American position. We would dearly love the Secretary of State to have enough influence in Brussels to achieve some movement in the European position. [Interruption.]
Every time I mention Brussels, Labour Members laugh. It is so childish. Do they not understand that most of the big decisions affecting manufacturing in this country that are taken by the Secretary of State for Trade and Industry either have to be cleared with Brussels or are governed by Brussels regulations or potential court judgments? That is why I have to mention Brussels, and why the Secretary of State would be wise to do the same. He should understand the Brussels limitation on his powers.
In this case, the Secretary of State should spend time in Brussels attempting to get officials to understand that it is not fair for British manufacturers to suffer because of a row between the EU and the US about an entirely different issue: bananas. Instead of being difficult— saying that he rather welcomes this trade war and trying to hype up the language and the rhetoric against the United States—the Secretary of State, and the Prime Minister for that matter, should be trying to bring the sides together.

That is what the cashmere industry wants, and it is even what the banana producers of the Caribbean want. They know that there must be negotiations and a deal. If the Secretary of State cares about Scottish cashmere, United Kingdom biscuit manufacturing and Caribbean bananas, will he please start negotiating, calm the tempers and inject some common sense into this very difficult situation?
Why is industry generally suffering so badly, according to the Chancellor's own analysis? It is because the Government are sucking it dry and taking its money away. There have been £25,000 million-worth of extra business taxes this Parliament. That money could otherwise be spent on much-needed new plant and equipment. The Government have imposed £15,000 million in extra costs from regulation. That money could otherwise be spent creating more jobs and new products and ideas. They have let the pound go sky high against the Asian and continental currencies, which has slashed our export earnings and left our industries struggling against a flood of cheap imports.
Let us look at the Government's impact on just one industry: the food industry. It is expected to pay £50 million for the start-up costs of the Food Standards Agency; £250 million in extra food safety costs; £21.5 million in additional Meat Hygiene Service costs; £500,000 in fish inspection costs; £1 million in egg inspection costs; £90 million in business rate increases; £92 million to implement the minimum wage; £4 million to set up the working families tax credit; and £78 million for the working time directive. The packaging waste regulations, staff car park tax and electrical recycling measures are three more costs in the pipeline. In common with other industries, the food industry must pay much more corporation tax, a tax on pensions and much higher motoring taxes. After that lot, how can any Minister say with a straight face that Labour looks after business and is seriously interested in making business more productive and more successful?
This Budget tells industry to go hang. The DTI told industry that loud and clear in its competitiveness White Paper. It stated that Britain will not be able to earn a living by making things. I know that the White Paper was produced by the Secretary of State's predecessor, but I think that he agrees with it. It states:
An advanced industrial nation like ours cannot support rising prosperity by producing standard products and services made with pedestrian methods and commonplace technology.
What a breathtaking statement by the DTI, writing off great chunks of our industry and services. It would be laughable if it were not so serious. The Government seem to be implementing this policy in the textile, steel, engineering and shoe industries, among others.
It is not possible for every company in the country to have the latest technology or to be full of scientists or the United Kingdom's best brains. We need other types of businesses and industries. Under a sensible economic policy, it is possible to employ people and make money by using ordinary technology to create commonplace things. There is nothing wrong with that. The Government


have declared war on such businesses. They have been successful in that war and they are doing a lot of damage to our industrial base.

Mr. Geraint Davies: Rubbish.

Mr. Redwood: I hope that the hon. Gentleman is not writing off all those businesses in his constituency that are not at the leading edge of technology. Many of those companies do not claim to be at the leading edge of technology: they simply want to make a decent living by employing people to make things that consumers want to buy using commonplace technology. The Government are making it too difficult and expensive for them to do that.

Mr. John Townend: Does my right hon. Friend agree that it is not only the manufacturing industry that is at risk? The London art market, which employs 5,000 people, is in danger because of the imposition of lower value added tax and a proposed tax from the European Union. Ministers will not declare that it is a British national industry and use the veto.

Mr. Redwood: My hon. Friend is quite right, and I have raised that issue in the House. The Government have failed signally to speak up for the London art market. They do not seem to realise how important it is. They have not promised or threatened to use the veto, which is the very least they should do given the serious threat that is posed to the future of that important market, on which many jobs and much income depend.
The Government conjure up an image of a future Britain as a province of Europe fit for spin doctors to practise in. Our vision of reality will be distorted not by smoke from the factory chimney, but by the smoke in our eyes from the lobbyists, public relations professionals and high-tech wizards who surround the new Labour project.
This Budget is proclaimed as a Budget that will provide more work for people. Yet, as we heard this afternoon, one of its important themes is to take a lot of work away from the Secretary of State. We are told that he is to give up the day job—dealing with competition in the United Kingdom market—which is now to be carried out by a new, enlarged and expensive quango situated further away from parliamentary scrutiny. The reason that we have been given is that we cannot trust politicians—I suppose that shows a little self-knowledge on the part of the Government. However, there are many occasions when the Secretary of State should be prepared to make decisions in the public interest. He should decide how much competition will be introduced and promote that cause.
I asked the Secretary of State a series of questions following today's statement, and I received absolutely no answers. When I write to the right hon. Gentleman, I am told that he cannot answer my letters and that I should ask my questions in the House of Commons. When I question him in the House of Commons, I receive no answers. Is that because the Secretary of State does not have any answers, or because he so hates democracy that he is not prepared to make any answers available through Parliament to the press and wider public?
Why can the Secretary of State not tell us whether he wants to introduce competition into the car or brewing industries or any other areas that I asked about today?

Why is it such a secret? I do not believe that the Secretary of State is unable to make a judgment on those matters, and I do not believe that he can get away with the excuse that they are not his responsibility. Until he has given his job away, they are very much his responsibility. Business must know where it stands. It is in flux, thanks to the new legislation introduced by the right hon. Gentleman's predecessor, and the Secretary of State owes it to the House this afternoon to provide answers to those important policy questions.
This Government, above all else and to a greater extent than their predecessors, pride themselves on their close day-by-day—even hour-by-hour and minute-by-minute— links to the media. How can we believe that the Government are free to make impartial decisions in the area of media competition when they owe so many favours in that field? When I asked the Secretary of State to make it absolutely clear that the one case in which his argument may have force—the media—would be transferred to his independent authority, he was unable to give me that reassurance and went on to say that he is about to decide on one of the most sensitive and important cases of all—whether BSkyB should take over Manchester United.
It is a great pity that the Secretary of State does not realise the logic of his position. He tells us that there are times when a Minister is compromised by the interests of the Government generally, yet when we have the best example of a case in which that problem could arise, it is the one case in which he will make the decision and leave himself in considerable difficulty. Perhaps he will help to resolve that conundrum when he responds to the debate.
I come from a constituency which, along with others, is leading the software, internet and communications revolution. I agree that all those sectors will be more important in the future and will provide many good jobs in the years to come. However, man does not live by mobile phones and e-mails alone. We still need clothes, food and houses. We still need to make things as well as say things. It would be wrong to write off the one fifth of our economy that is based on manufacturing.
The new industries do not welcome the siren call of the new regulators. The Government threaten them with e-commerce legislation. When I met representatives of the Federation of Electronic Industries the other day, they agreed with me that elements of the new law are more likely to stifle than to stimulate the new technology.
What should the Chancellor have done in the Budget? He should have taken to heart the Prime Minister's words about doing things the American way. He should have apologised for tax increases past and avoided all stealth taxes future. He should have put off the regulations that now threaten much British commercial success. He should have struck out boldly for a freer market. The Budget could have offered a prosperous future for manufacturing. Instead, the Chancellor chose to ignore the pleas of British industry. He will live to regret that.

Yvette Cooper: If the right hon. Gentleman's party is so good at encouraging business and innovation in business, why is there a 40 per cent. productivity gap between UK companies and American companies?

Mr. Redwood: The productivity gap is largely the result of the higher taxes, higher exchange rate,


higher interest rates and higher regulatory costs that this Government have imposed. In 1995, BMW thought that Britain was the best place in Europe, bar none, to make motor cars. Under this Government, it is talking of pulling out, and the Secretary of State will have to offer a lot of money to try to keep the company here. What has changed is not British productivity by British managers and workers, but the Government's policy.

Mr. Richard Burden: The right hon. Gentleman referred to BMW and the high rate of sterling. It is true that the company has commented on that. Will he comment on the statement by Mr. Samann, the new BMW-appointed chair of Rover, who said:
We do need some help from a more realistic level of sterling; a proper interest rate strategy and government fiscal policies can achieve that without inflating the economy. Early entry of the UK into the Euro would benefit all exporters"?

Mr. Redwood: I agree with all of that apart from the last comment about the euro, and if I were handling the negotiations with the BMW chairman, I would explain to him why I think that and try to persuade him that, under a Conservative Government, Britain would again be the best place in which to invest and to make motor cars. When one of my hon. Friends saw the hon. Gentleman leaving the House of Commons the other day, he noticed that he was not driving a Rover car or one made in Longbridge, which seems a great pity. Surely it is best for all hon. Members interested in that industry to buy cars from Longbridge.

Mr. Burden: I do not know what car the right hon. Gentleman saw me driving. I own a Rover 200 and my partner drives a Mini, so perhaps the right hon. Gentleman would like to apologise.

Mr. Redwood: If that is true, of course I apologise. I said that an hon. Friend had observed the hon. Gentleman, and he was apparently driving a Vauxhall out of the House, which seemed a pity for one who is meant to be defending Rover. I assure the hon. Gentleman that my wife and I make sure that we buy British and represent the British motor industry.
The American economy has been growing much more quickly than the European economy. Industrial production has leapt ahead in the USA thanks to interest rates, tax rates and exchanges rates that make sense for business. Industrial production has been sluggish on the continent, and countries are trying to drag themselves out of the mire by devaluing against the UK and the US.
Why do the Government want to converge with slow growth and high unemployment? Do they want a fifth of our work force to be out of work, as in Spain or southern Italy? Do they want our output to crawl ahead as some continental output has done in recent years? Why does the Prime Minister tell us that he wants a single currency as long as Europe follows the American dream? Does he not realise how stupid that sounds? Even he must realise that it will not happen. It is like saying that the Government are determined to have only fine weather and have instructed everybody accordingly on their pagers, so it is bound to work.
The Secretary of State for Trade and Industry delights in being the cover-up Minister. He will not answer letters and he does not like answering questions. When Parliament is not in Session, he waits until it resumes and then says that it is not permissible to write letters to him and that questions must be tabled instead.
The other day, I asked what impact a 1 per cent. increase in various costs would have on British industry. The Secretary of State must know the answer. I do not believe that he is so incompetent that he has not done his sums. His temporary lapse on his sums is not representative of his work as a whole. I am sure that he can work out percentages. So what did he say instead of giving me the answer? He replied that this Government were abolishing the boom-bust cycle. I asked nothing about cycles or busts.
The Secretary of State may be less grey than we thought if he has all those busts in his brain, but is it not about time that he lifted the quality of debate and told us what is the impact on companies of higher exchange rates, higher labour costs and higher regulatory costs, and what he is going to do about that? His failure to answer tells us a great deal about his state of mind. Either the Secretary of State is preoccupied or he knows that this is the big issue, but does not know how best to cover it up and so continues his trite mantra about no more boom and bust.
Of course, the Secretary of State and the Chancellor prefer to blame British industry. The Secretary of State tells us that it is not the Government's fault that we have a record trade deficit; that that has nothing to do with having sky-high sterling or higher interest rates than our competitors; that business is not short of cash because the Government are milking it dry; and that it is all industry's own fault for being unproductive. That is another nice irony. At precisely the time when one part of the Government are trying to subsidise people into work, the Trade Secretary and the Chancellor are trying to price people out of industrial jobs and to encourage a massive labour shake-out from traditional sectors. Everything that the Treasury and the DTI have done in the past two years has made it more likely that industrial payrolls will be slimmed down mercilessly.
One job is lost every 10 minutes. The Trade Secretary offers more job losses as his answer, which is dressed up as 75 points from a White Paper, but amounts to just one simple, painful, unfriendly point. It says to British industry, "Sack some of them now, or go bust. Get rid of some of them today, or get rid of them all tomorrow." That is Byers's choice. That is the Government's choice. They make it too dear to employ people and business has the horrible job of telling people that they are out on their ear.
This is a Budget of soundbites and contradiction. It is a family-friendly Budget which reveals just how family-friendly it is by removing the married couples allowance and mortgage interest relief. It is a shareholders' Budget which leaves in place the hated pensions tax, which taxes the main way that people in Britain own shares. It is a Budget for jobs, but its main recommendation to industry is to slim down the payroll and pray for better times.
The combination of trade war, stealth taxes and a big increase in regulation is lethal. Meanwhile, the Government weep crocodile tears over small businesses while tying them up in ever more paperwork and


regulation and imposing higher national insurance on the self-employed. Businesses have to cope with new rules on unfair dismissal, the working families tax credit, the minimum wage, statutory sick pay, EU paternity leave, emergency leave, union recognition, the working time directive and extended maternity leave. We shall soon find that as the small business man comes to the end of his 48 permitted hours, he has worked only for the Government and has had no time to work for his customers and himself. The Government have swamped him with more paper than the Andrex puppy.
Pity the poor haulier facing more vehicle excise duty on top of the DERV and other taxes. What advice does that vanishing British industry get from Ministers? Hauliers are told to go to the continent to fill up. Some are doing more—they are going to Luxembourg to set up and pulling out of Britain altogether.
Labour views this as an election Budget for Wales and Scotland. The farmers will not see it like that because they will remain in slump. Rural dwellers will not see it like that as they seek a mortgage to pay to use their car. People who want better schools and hospitals will not see it like that as they watch the money being wasted on other things.
This is a Budget for manufacturing collapse and industrial unemployment. It may make work for accountants and lawyers, but it will not work for business. It certainly means bust for manufacturing. The only boom that I foresee is a continuing boom for spin doctors seeking to explain away the industrial collapse. I beg to oppose this Budget.

Mr. Deputy Speaker: Before I call the Minister, I should inform the House that the Speaker has decided that there will be a time limit of 10 minutes on Back-Bench speeches between 6.30 and 9.30 pm.

The Secretary of State for Trade and Industry (Mr. Stephen Byers): I am grateful for the 40-odd minutes that the right hon. Member for Wokingham (Mr. Redwood) took to set out his opposition to the Budget. It was The Daily Telegraph, I think, which stated that, each time the right hon. Gentleman gets up and speaks, he loses votes for the Conservative party.
The Budget presented yesterday by my right hon. Friend the Chancellor will have broad and popular appeal for business, for British people, for those who rely on the public services, and for parents who have children in school, because it confirmed that the £19 billion promised by the Chancellor as part of the comprehensive spending review was to be devoted to our schools. For those who need health treatment, the £21 billion for the national health service has been confirmed.
It is possible to marry fiscal prudence with the need to invest in high-quality public services. That is what the Budget will do. It takes forward the agenda outlined by my right hon. Friend the Chancellor. It is a Budget for jobs, enterprise and the family. That is what we should be debating this evening. I regret that the right hon. Gentleman did not use the opportunity to address those issues.
This is a radical Budget, which recognises that our country's future economic success depends on promoting fairness and enterprise. It is a new Labour Budget, based on a fundamental understanding of the role that business and Government can and should play in relation to the economy. Businesses create jobs and wealth. Entrepreneurs take risks in the face of uncertainty, and open up new markets. Governments should not try to second-guess boardroom decisions, yet much of what we heard from the right hon. Gentleman this evening sought to encourage us to do precisely that—massive intervention in the way in which businesses operate.
That is not the way in which the Government intend to go. We believe that the responsibility of Government is to create the climate and the framework in which business can prosper without interference from Government. The right hon. Gentleman said that Labour does not look after business. It is hardly surprising that he should say that, as the principal Opposition spokesman on trade and industry affairs.
It would be far better to listen to the comments of people who do not have a vested interest and do not approach the matter from a party political perspective— or perhaps some of them do. Let us consider the comments of some captains of industry on yesterday's Budget.
Sir Ronnie Hampel, chairman of ICI, welcomed the overall approach of continuing the direction adopted in previous Government statements about laying the foundations for business growth. The chief executive of Asda, no longer the hon. Member for Tunbridge Wells (Mr. Norman), but Sir Alan Leighton, said that he was happy with the Budget. He said that it was a Budget for individuals, families and enterprise and that the benefits that it brought to all three would go through to every sector. Lord Harris, chairman of Carpetright—who, if I remember correctly, has over time been a substantial donor to Conservative party funds and is one of the few business men who still give generously to Conservative party funds—thought that it was a good Budget for his business and that it would get people spending, especially at the bottom end.
Those are overwhelming endorsements from people who, with the possible exception of Lord Harris, do not approach the Budget from a party political position.

Mr. Christopher Gill: There is another exception. If the right hon. Gentleman reads today's press, he will see that Eddie Stobart, the boss of one of Britain's biggest road haulage firms, says that he could save his company £2 million a year by moving his transport fleet overseas and basing it abroad. Is the right hon. Gentleman not aware of the huge damage that is done to the road haulage industry? Does he not recognise its effect on British industry?

Mr. Byers: I have not seen that quote from Mr. Stobart, but I will read it. He should look at the tax regime in the round. He will find that we offer a far more friendly tax regime in the United Kingdom than he would find in France, for example. It is for Mr. Stobart to make those decisions, but, if he looks at the tax regime in the round, he will see that it is supportive of his industry.
I was examining the comments that have been made about the Budget. There were some interesting comments from one person who does come at it from a party


political perspective, the former chief executive of Asda, now the vice-chairman of the Conservative party, the hon. Member for Tunbridge Wells. On radio yesterday, he said:
We welcome the help for small business. I think that's good. We welcome the reduction in corporation tax and lower corporation tax for smaller businesses. That's good. As I said, we particularly welcome it in Asda. We are very keen on employee share ownership. I think everybody in the country is dead keen on it and that's good.
He concluded by saying:
Overall, not a bad business budget.
That is a vice-chairman of the Conservative party, going on the record publicly and endorsing our approach, in conflict with the views of the right hon. Member for Wokingham, who speaks for the Opposition on these matters.

Mr. Bercow: Is the right hon. Gentleman not aware that the president of the Confederation of British Industry, Sir Clive Thompson, has said that the Government are responsible for a creeping paralysis of regulation, and that, unless action is taken to reverse the trend, that regulation will be the principal growth industry in the United Kingdom?

Mr. Byers: The hon. Gentleman should see what Sir Clive said about the Budget. I think that he will find that Sir Clive is not critical. Adair Turner is broadly supportive of the measures in the Budget. I was at a meeting with him this morning, with my hon. Friend the Financial Secretary, at which Mr. Turner clearly said that the tax burden on business was reduced as a result of the Budget introduced by the Chancellor yesterday.
Let us debate the Budget. I urge hon. Members to take the opportunity to debate it. Let us have a debate about the ideas, the initiatives and the promotion of enterprise and fairness.

Mr. Redwood: Will the Secretary of State confirm, as does the Red Book, that business will face a tax increase as a result of this Budget in 1999–2000, the immediate relevant year? We cannot be sure what will happen in two years, because there will be more Budgets. For the year that we can be sure about—the coming year, 1999–2000—the figures show an increase in business taxation, do they not?

Mr. Byers: The overall Budget delivers £4 billion of tax cuts. The right hon. Gentleman should consider carefully the measures that he supported when he was a member of the Cabinet. They would have meant an increased tax burden, compared to the measures that we are discussing. Business would have faced a greater tax burden, had the proposals that he supported continued. We do not agree with imposing such burdens on business. We are reducing the burden, compared to that which would have been imposed by the right hon. Gentleman.
The Chancellor was able to present that Budget yesterday because, early on in office, he took the tough and difficult decisions necessary to ensure that we have economic stability. By ensuring that, he could announce the initiatives proposed yesterday.
It is particularly significant that my right hon. Friend was able to do that, given the situation that we inherited when we took office in May 1997. Conservative Members do not like to be reminded of the economic mess that they left behind, but I shall remind them, and I might even mention not just boom and bust, but Tory boom and bust. I certainly shall not be referring to a golden economic legacy, because it clearly was not.
We inherited an economy in which output was rising at a rate that simply could not be sustained, inflationary pressures were building, with inflation set to rise sharply above its target level, and there was a large deficit in public finances—£28 billion, to be precise. Contrast that with the £4 billion surplus this year. Moreover, for the coming five years, we estimate that there will be a Budget surplus totalling £34 billion.
Look at what happened under the Conservative Government. Their deficit over the last economic cycle was not £50 billion, not £100 billion, but £1 billion short of £150 billion. Even with my poor mathematical skills, I know that that is £149 billion. That is the legacy created by the right hon. Member for Wokingham and his Government.

Mr. David Prior: Why does the Minister believe that so many foreign companies decided to invest in Britain during that time?

Mr. Byers: There were two reasons. First, they saw the UK as a means of entry into the European market, something which will be put at risk by the policies promoted by the right hon. Member for Wokingham. Secondly, the figures show that last year was one of the best in terms of inward investment decisions. That was 1998, the year of a Labour Government.

Sir Raymond Whitney: On the question of the golden legacy, which the right hon. Gentleman seeks to dispute, what does he think of the view expressed by Mr. Anatole Kaletsky, who says:
Mr. Brown's apparent generosity has been greatly assisted by the long-term tax increases that were bravely introduced by Tory Chancellors"?

Mr. Byers: The hon. Gentleman makes my point for me. That conflicts with the approach of the right hon. Member for Wokingham. That is one reason why we were not prepared to endorse that raft of tax increases proposed by the Conservative Government, and why the tax burden is reduced as a result of the Budget. I am grateful to the hon. Gentleman for drawing that to my attention.
We have economic stability because we took the difficult decision to take politics out of the setting of interest rates. We will not hear the Tory policy on that from the right hon. Gentleman. The Opposition Front-Bench spokesmen have taken a Trappist vow of silence on that. I think that I know the view of the right hon. Member for Wokingham. It is a shame that he cannot discuss it openly. He smiles because he knows that he would not have given independence to the Bank of England. It is a shame that he cannot speak his mind on the issue. Unfortunately, he cannot say what he truly believes.
We took the necessary steps to put public finances back on a sound footing. They were not in that condition when we took office. We have created a new framework for


stability in monetary and fiscal policies. It is because we have taken those steps that, for the past seven months, inflation has been at or around the target level of 2.5 per cent., and short-term interest rates have peaked at half what they were in the early 1990s, and have fallen by 2 per cent. in the past two months alone. As my right hon. Friend the Chancellor said yesterday, that reduction in interest rates will save the typical home owner around £900 a year on his mortgage. Britain now has the lowest mortgage rates in 33 years. Long-term interest rates are now at their lowest level since the mid-1960s.
The right hon. Member for Wokingham talks about jobs being lost. I understand the pain felt by people who have lost their jobs. I know my constituency well, and I share my constituents' pain, frustration and anger when jobs are lost. But my constituency now has more people in work than on 1 May 1997. Throughout the north-east, which has been affected by the global downturn, more people are in work. Nationally, 400,000 more people are in work than in May 1997. Those are the facts. The right hon. Gentleman likes his own prejudices to get in the way of the facts, but on this occasion he should look carefully at the true position.

Mr. Redwood: What does the Secretary of State think will happen to manufacturing jobs, industrial jobs, during the next year? Does he agree with the union forecasts, or is he saying that there will be no overall job losses?

Mr. Byers: I am trying to ensure that factories such as Siemens have a new owner so that people can get back into jobs. I want to see more positive announcements, such as the one this morning from Peugeot in Coventry announcing 900 new jobs. Why does the right hon. Gentleman not applaud that fact? He says not a word about it. He ignores it. I welcome that announcement. It came about as a result of initiatives taken by the Government and by my Department. We shall continue with such work. There are now 400,000 more people in work than when we took office. Unemployment in the right hon. Gentleman's constituency is dropping. In the constituency of the hon. Member for Daventry (Mr. Boswell), there is a 22 per cent. reduction in unemployment. The Labour Government are prepared to work even for those constituencies represented by Conservative Members.

Mr. Tom King: The right hon. Gentleman rightly says that he is here answering for the Government on the whole Budget. Obviously, everyone welcomes new jobs in any area; they would be as welcome in my constituency as they would be in his. But the right hon. Gentleman was asked for a judgment on the overall Budget, and that matter gives me concern. The figures appear to show that there will be a substantial increase in unemployment in manufacturing industry. The right hon. Gentleman is party to the Budget and the Budget sums. Is that correct?

Mr. Byers: Once again, it would have been nice had the right hon. Gentleman reflected on the fact that unemployment in his constituency is now down by more than 20 per cent. since the general election. The Budget brings good news for manufacturing. Substantial tax concessions have been introduced, specifically targeted at the manufacturing sector, and manufacturers want economic stability, not a return to the early 1990s and the

days of Tory boom and bust. I can remember those days. In north Tyneside, around my constituency, not just tens or hundreds of jobs, but thousands, were lost in basic manufacturing industry because of Tory boom and bust. My constituents do not forget that, and that is why they voted for a Labour candidate.
I am outlining the steps that we are taking to help the manufacturing sector. However, we need to be realistic, and there is no doubt that, as we face a global downturn, some sectors of industry will be affected. To overcome that difficult situation, we need economic stability, and we believe that we have created the framework for that.

Mr. David Chidgey: The right hon. Gentleman rightly says that tens of thousands of jobs were lost in manufacturing in the 1970s and 1980s, but he will also know that there has been a worldwide decline in manufacturing employment, and those jobs will not come back. The right hon. Gentleman is clearly trying to impress on us the number of jobs that have been created since the Labour party took office, but will he confirm that far too many of those jobs are less skilled than those that were lost—the jobs that do not come back?

Mr. Byers: A mix of employment opportunities is being created. It is a dangerous game to denigrate certain types of employment because they are part time or flexible, because many people now like to have such employment. Many full-time employment opportunities are being created in manufacturing which are well paid and high tech. That is the reality. Today's announcement of 900 high-quality, well-paid manufacturing jobs being created by Peugeot is a good example of that. I would hope that Opposition Members, from whatever party, would welcome that approach.

Mr. Andrew Lansley: rose—

Mr. Byers: I have taken a number of interventions; I will give way in a few minutes, when I have made some progress.
The International Monetary Fund report published on Monday shows the extent to which impartial observers think that the economy is doing well. The IMF gave the economy a glowing bill of health and its report praised the United Kingdom's impressive economic performance in recent years and the Government's skilful management of the economy.
The IMF said that the private sector fundamentals were strong and that any slowdown in the economy would be short-lived. It gave credit to the new monetary policy framework for leading to timely and judicious changes in interest rates and welcomed the Government's basic welfare-to-work thrust as improving the work of the labour market. When the IMF had analysed the Government's approach to the economy, it strongly endorsed the attitudes that we have adopted.
As the Chancellor said yesterday, we understand that there will be difficulties, with a quarter of the world in recession and world growth being cut by half. We have to overcome those short-term difficulties and we believe that the steps that we have taken, which will be carried through by the Budget, will ensure that we can steer a course of stability. Conservative Members know that full well and that the economy is now in a strong position.


We need to build on that strength. In particular, that means that we must seize the opportunities provided by the knowledge-driven economy of the future. If we fail to do that, we will be left behind as a country and as a people.
Success in tomorrow's fast-moving world depends critically on how well we exploit our most valuable and distinctive assets—the knowledge and the talent of the British people. The first industrial revolution was based on investment in capital and machinery. The revolution that we are going through requires investment in human capital—in skills, in learning and in education. That commitment comes from the Government.
Here is a message for all industry: knowledge is increasingly important not just for new industries; it will affect old, traditional industries just as much. They must embrace the knowledge-driven economy. Some are doing so, but all the traditional sectors need to do so if they are to prosper.
Last December's White Paper on the knowledge-driven economy set out a model for industrial policy for the next century. First, we must invest in British capabilities—in particular, our world-class science and engineering base and our skills. Secondly, we must act as a catalyst to collaboration between businesses and between businesses and our important science base. Finally, we must promote greater competition—principally, by empowering consumers, but through regulation where necessary. That is why I said to the House earlier that we will fully implement the 75 commitments in the White Paper. An implementation plan, which will show clearly how we intend to deliver on those commitments, has been published today.
A more fundamental challenge faces us all and goes beyond government: how can we end the poverty of ambition in Britain, which has held us back for too long? In government, in business, in universities, in schools and throughout society, we must foster a new spirit. We must be prepared to seize opportunities to turn new ideas into successful products and services and be committed to constant innovation and improved performance. Yesterday's Budget was an important step on the road, introducing measures that will encourage the new spirit of enterprise.

Mr. Lansley: A few moments ago, the right hon. Gentleman said that the Budget contained tax measures designed to help manufacturing. I am looking through the table of "Budget 99" measures. He will of course be aware, on behalf of manufacturing, of a further table in the Red Book listing a large number of additional measures, which were announced before "Budget 99"— in 1998 or earlier—and take effect after this Budget. I have found 14 measures that will increase taxes on business, totalling £2.8 billion for the year beginning 1 April 1999. So far, I have found three measures that will reduce tax by a total of £15 million. There is £2.8 billion in extra taxes and a reduction of £15 million, which is a pretty poor show.

Mr. Byers: I would accept that a £15 million reduction is not good enough; we need to do better. If the hon. Gentleman looks through the Red Book and reads the

statement made by my right hon. Friend the Chancellor yesterday, he will see that the impact on investment will allow small and medium companies to write off 40 per cent. of all that they invest in plant and machinery in the coming year. That is particularly important for manufacturing companies. I am sorry that the hon. Gentleman did not see that example of what we have done; perhaps he chose not to see it.

Mr. Lansley: Will the right hon. Gentleman give way?

Mr. Byers: No, I will not. The hon. Gentleman has had his chance. We have provided £325 million, which can be written off against investment in plant and machinery in the coming year. That is the reality, and it is a shame that he is not aware of it.
Other steps that will be introduced as a result of the Budget will make a real difference. For example, my right hon. Friend the Chancellor confirmed the reduction in the basic rate of corporation tax, ensuring that it will be reduced to 30 per cent. from April this year—down from 33 per cent. when we took office. That is the lowest rate of any major country in Europe and the lowest rate of any major industrialised country, including Japan and the United States.

Mr. Townend: Will the right hon. Gentleman give way?

Mr. Byers: No, I will not.
We are also cutting small companies tax to 20p in the pound—down from 23p when we took office—and, to promote even greater enterprise and investment, we announced a new starting rate for small businesses of 10 per cent., which is the lowest ever starting rate. We calculate that 270,000 businesses stand to benefit from that reduction, and 85 per cent. of them employ fewer than 10 employees. That will make a huge difference.
Corporation tax rates of 10, 20 and 30 per cent.— guaranteed to be no higher in the lifetime of this Parliament—show how serious we are about encouraging business and ensuring that the United Kingdom is a good place in which to do business.

Mr. Redwood: Will the right hon. Gentleman give way?

Mr. Byers: I want to make some progress; I will give way shortly.
We need to ensure that those opportunities are provided, but other, non-tax, measures will benefit industry. As I said in my statement, we will be setting up the new Small Business Service to improve Government assistance to those vital businesses. It will have a strong voice for small business at the heart of Government, and it will improve Government services to small businesses and ensure that those services address the real needs of the sector.
We have not forgotten the importance of science. The Budget shows our commitment to investing in Britain's capabilities, and our science and engineering base must be world class. Scientific discovery underpins our quality of life and is an invaluable source of wealth creation, economic regeneration and employment. That is why my right hon. Friend the Chancellor yesterday increased the Government's contribution to the university challenge fund, which will make a real difference in respect of the commercialisation of scientific research.
I want more British inventions to be transformed into British products—creating jobs and wealth here in Britain. That is not the case at the moment. Our proposals and the measures announced in the Budget will change that and ensure that we can take advantage of our own ideas and do not see them exploited by other countries.

Mr. Redwood: I think that the right hon. Gentleman inadvertently misled the House when he replied to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). I have checked the Red Book. It is very clear that the tax breaks for small and medium enterprises and the research and development tax credit do not come into effect in 1999–2000, the year about which my hon. Friend asked. I hope that the record will be corrected. The fact remains that there will be a big increase in tax in 1999–2000, mainly from the first two Labour Budgets, but also from the cumulative impact of this third Budget, which also raises taxes in that year.

Mr. Byers: I think the record will show that I was referring specifically to the £325 million that we are providing for write-offs—in the coming year. When the right hon. Gentleman has time to look at the record, he will doubtless reflect on that. I was talking about the year specified by him—the year ahead.

Mr. Townend: Will the Secretary of State give way?

Mr. Byers: I want to make some progress, given the number of hon. Members who wish to speak.
There can be no doubt that the economy of the future will succeed for our people only if it respects the environment. Protecting the environment remains a priority for this Government, and getting the environmental framework right will be good for businesses as they move into the clean technologies of the future. Yesterday's decision to implement the recommendations of Lord Marshall, the former president of the Confederation of British Industry, will make a significant contribution to the improvement of energy efficiency in business, and will also meet the United Kingdom's climate change targets.
Notwithstanding the claims of Conservative Members, the new tax will entail no increase in the burden of tax on business. The revenues will be recycled in full for business, through—among other mechanisms—a cut in national insurance contributions.
We welcome the strides that have already been made by many firms—especially those in more energy-intensive sectors—to improve their energy efficiency. Special consideration will be given to particularly energy-intensive industries. We intend to set significantly lower tax rates for energy-intensive sectors that improve their energy efficiency, and we have asked them directly to submit their proposals. Businesses will also gain from an additional £50 million for schemes to promote energy efficiency and renewable sources of energy.
We need to consider the skills gap. We must ensure that we equip everyone in Britain with the skills that they will need to succeed in the computer-driven world of the future. That is why we will create a national network of 1,000 computer learning centres—one for every community in Britain. That network will have one purpose: to ensure that Britain and our people are equipped for the information age. Inequality in computer

learning today will mean inequality in earning power tomorrow. Anyone who is left out of the knowledge revolution will be left behind in the knowledge-driven economy, and that is unacceptable to the present Government.
This Government believe that the best way in which to address inequality and social exclusion is the creation of a more affluent, more successful Britain, providing everyone with opportunities to achieve their full potential—opportunities that accompany the success of British business at home and abroad. Equally, however, the fairer Britain is—the more open it is to the talents of all, whatever their class or background—the more enterprising and prosperous all Britain can be. That is why yesterday's Budget reformed the tax system in favour of work, enterprise and families. It made the tax system fairer by announcing the new l0p rate of income tax, which will be introduced in just a few weeks' time, and a cut in the basic rate of tax from 23 to 22 per cent., which will be introduced in April next year. Those two cuts will increase the rewards of work for all working taxpayers, while targeting the benefits on the low-paid and making work pay.
Our first principle in supporting the family is that the interests of children must be paramount. For the past 30 years, families with children have been the losers in the tax system: their tax burden has risen by nearly 20 per cent. under successive Governments. That is why we are increasing child benefit by 3 per cent. in real terms from April next year. It will be worth £15 a week for the first child, and £10 a week for subsequent children. That will make a real difference to families who are supporting parents and have other responsibilities.
Yesterday's Budget also guaranteed a better deal for all pensioners. It provided a fivefold increase in the winter allowance, from £20 to £100, and took an extra 100,000 pensioners out of tax altogether. It provided for pensions to increase in line with wages rather than prices. It also provided a guaranteed income for pensioner couples of £121 a week, nearly £800 a year more than the amount that obtained when we took office in 1997. On average, pensioner households will be £240 a year better off.
I was particularly interested by the comments of Stella Hague, the mother of the Leader of the Opposition. Commenting on the £80 rise in winter fuel payments for pensioners, Stella Hague, aged 71, said, "It's very nice to have it. The £100 will be very acceptable." Given that the Leader of the Opposition now believes in "kitchen table" politics, perhaps he will get around the kitchen table with his mother, and take some of her advice in regard to the Budget.
Yesterday's Budget is a Budget for enterprise and fairness, a Budget which could be brought about only because of our prudent economic management of the economy. It will ensure a better deal for children and the elderly, a better deal for the hard-working majority and a better deal for Britain's enterprising small businesses and risk takers. It is a Budget for the many, not the few. It is a Budget which is radical and forward looking. It is a Budget for prosperity, fairness and social justice, and I commend it to the House.

Mr. John MacGregor: Given what the Secretary of the State said about he mother of my right hon. Friend the Leader of the Opposition, I must say that I do not consider the £640 million that has been devoted to those cold weather payments to be a prime example of the concentration of massive sums on those who are most in need.
Although I have escaped the 10-minute limit, I intend to limit my speech to 10 minutes anyway. Let me begin by making two declarations of interest. First, as I want to say something about savings—if I have time—I should declare that I am a non-executive director of Friends Provident. Secondly, I am a member of the Magic Circle—and, more precisely, an associate of the inner Magic Circle. It is for that reason that I shall say what I am going to say about the Budget.
In magic, or conjuring, what matters is not what people see on the stage, but what is hidden from their view. Yesterday, it was not what the Chancellor said that mattered, but what lay in the detailed notes behind it. Listening to the speech, as all the so-called goodies unfolded, I was somewhat bamboozled as to how it all added up—until, reading the press briefing later, I found that it was explained by two factors, as well as the windfall of the £4 billion reduction in debt interest payments resulting from lower interest rates worldwide.
First, the Chancellor has introduced a new principle in Budgets. I am something of a connoisseur of Budgets, having been involved in framing some. The new principle is this: "We have not got enough to announce in this Budget, so we shall announce next year's as well, and some of the following year's too". That explains why so many goodies could appear. Reading the press briefing, I could not believe my eyes. Time after time, I came across something that had been announced—something that we all thought would appear this year—which, we now find, will be introduced in the Finance Bill in 2000, or, in some cases, in the year after that. The presentation of the Budget involved an enormous number of conjuring tricks, if I may put it like that. It takes one to recognise another.
That is best illustrated by a table at the front of the press briefing. According to the table, the average household will be £380 better off. The implication is that that is a result of this year's Budget. It is necessary to turn to the notes for editors to discover that the measures involved are those announced in both the 1999 and the 1998 Budgets, and that they will take effect over the three years from 1999. Moreover, the national minimum wage will have an impact. Everything has been thrown in to produce the highest possible figure.
The other factor is this. As my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out, the Government—as is so common with them, especially in regard to public expenditure increases—have reannounced measures that had already been announced. When I started to look through them, I recognised, as a former Chief Secretary to the Treasury, that the Government had done what we used to do: they had taken some sums out of the year two contingency fund and put them into year one programmes. The number of additional programmes is small. The Government received lots of plaudits from Labour Back Benchers, but their actions are no different from those conducted in the past. We should not be overimpressed by the figures that the Chancellor announced.
It is dangerous for the Chancellor to take a three-year view in a one-year Budget. A possible trap lurks, especially given that the big tax reductions are earmarked for the later years—as usual with the Chancellor. Overall tax reductions total £1 billion in the year ahead and £3.5 billion in 2001— surprise, surprise. However, the danger is that, if the reductions in debt interest fail to materialise in the later years, or, more particularly, if growth, which, again, is expected to rise much more in the later years than this year, fails to materialise, the Chancellor will not be able to introduce additional improvements and benefits on top of those that he has announced. Therefore, he will depend on economic performance worldwide and in this country over three years to implement the Budget fully.
Of course, I welcome some of the measures in the Budget. Even more, I welcome the fact that it does not include measures that previous Labour Chancellors would have been tempted to introduce.
By introducing lower direct tax rates, the small business and enterprise measures, and employee share-owning schemes, the Chancellor is simply following policies and approaches that we Conservatives pioneered over 18 years. Naturally, I am pleased that Labour has been converted to what until now has been an entirely Tory approach, but the Chancellor should not claim, as he did yesterday, that he is embarking on new directions. He has simply recognised the success of the policies that we pursued over 18 years and carried quite a number of them on. It is those that I welcome.
I thought that the small business measures were going to be classic. In fact, I had a great sense of déjà vu because some of them were extremely like the measures that the Conservative Government introduced when I was the Minister with responsibility for small business between 1981 and 1983. However, I looked at the details and too many of the measures were too small and fiddly.
The 10 per cent. corporate tax rate for small businesses looked extremely good until I saw that it was limited to £10,000 profit. Small businesses might be advised not to become incorporated in the first place—the costs of doing so would probably outweigh the benefits of that tax change. That was not apparent in the Budget speech.
One of the features of the Budget is that it has further complicated the tax system, when it should be simplifying it. A range of the measures—all very small, apparently desirable, and which have immediately received a good press—will just complicate the system and not have a big impact.

Mr. Howard Flight: Will my right hon. Friend give way?

Mr. MacGregor: No, I will not, if my hon. Friend will forgive me.
The Government propose to establish the Small Business Service. When I was Minister with responsibility for small business I was responsible for the Small Firms Service. Then we used business people to advise small firms; at that stage, there were not many self-employed and small businesses. We changed the culture successfully over the succeeding years. The service was designed to advise small businesses on practical measures such as marketing, financial control and so on.
I was amused by the highlight of the press release for the Small Business Service:
The SBS will have a new role helping businesses comply with regulation.
That is like someone saying, "I am going to torture you, but I have good news for you. I have a therapist who will help you to endure the pain."
I have grave doubts as to whether it is right to have publicly financed venture capital funds of the sort announced in the Budget when one of the great successes of the British economy is the growth of venture capital funds from the private sector. The £20 million is peanuts compared with what is being raised from the private sector, including that from venture capital trusts this year, so, again, it sounds like a gimmick.
The main point I should like to make about small businesses is that, overall, all the measures have few pluses when we compare the minus side of companies having to pay at least £4 billion more in tax in each of the next four financial years. The changes that reduce tax are very small compared with the measures introducing those big increases.
The Secretary of State for Trade and Industry did not deal with that point in answer to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). If the Secretary of State looks at pages 112, 113 and 120 of the Red Book, he will see just how big the increases in tax in the corporate sector are in the 1997, 1998 and 1999 Budgets. They include road fuel duties and the changes in advance corporation tax, which, as Sir Clive Thompson, the Confederation of British Industry president, has pointed out, will add considerably to the tax burden of the business sector over the next four years.
I should like to mention only two more points, because I want to keep within the 10-minute limit if I can. I am really bothered that the fuel duty escalator is inflicting real damage to the economy and to rural areas, and is producing very little environmental benefit. It was originally introduced some years ago to deal with the effects of greenhouse gases and to meet the targets under the original Rio de Janeiro convention, which was followed by the Kyoto convention.
It was felt—as a former Secretary of State, I understand the reasoning—that there had to be some reduction in emissions and that pricing was one way in which to achieve that. With the escalation in that fuel tax, however, and given that the Government increased the escalator beyond what the Conservative Government established, and, in their first year of office, doubled the amount of tax by taking a second chunk of it, we have the highest petrol costs in Europe. Tax represents a higher proportion of the cost of fuel in the UK than anywhere else in Europe.
We have overdone it. We are getting to the equivalent of the law of diminishing returns in relation to the environmental benefits. Frankly, people want to use their motor cars. The damage inflicted by the tax on petrol is seen in rural areas in a constituency such as mine. Most of the representations that I receive are fiercely against the escalator. For many people in rural areas, there is no practical alternative to the car for going about their daily business: getting to work or taking children to school. That tax increase, which is bringing in vast revenue, will have serious consequences for such rural areas, on top of the consequences of earlier measures. It is often those on

lower incomes who will have to pay the cost—at least £60 more this year—thus removing the benefits of many of the measures to help the lower paid.
The measure's effect on the economy and its competitiveness is also great, as many road hauliers point out. In addition, there has been a savage reduction in the road programme, which I strongly criticise because I believe that there will inevitably be an increase in road transport. That, combined with the fuel duty escalator, means that we are in danger of adding a factor of considerable uncompetitiveness to the British economy. The Secretary of State, who endorses the competitiveness White Paper, should deal with that issue. The time has come to stop the fuel duty escalator—it is one of the most damaging parts of the Budget.
There is not much in the Budget to encourage the saver or more people to take out pensions. That fact, and all the various measures that the Government have taken before, mean that I am not optimistic that we will achieve the increase in pensions that we seek from all age groups, but particularly younger generations.
The removal of £5 billion from pension funds in the Chancellor's first Budget, the impact of which the ordinary person has not yet understood, has helped him to fund quite a few of the tax reductions in the current Budget, but that measure will do long-term damage, disadvantaging those who retire on pensions. It is already taking away money from pension funds and increases the danger that companies will have to make higher contributions and, therefore, face a higher cost to fill that gap.
That problem is exacerbated by the fact that individual savings accounts are no substitute for the TESSAs and PEPs which we left to the Government. Moreover, the capital gains tax reforms are a huge missed opportunity and are not well directed, while non-tax paying pensioners are being treated appallingly by not being allowed to reclaim their dividend income. We can add to that the confusion over the pension schemes created by the Government and the discouragement of traditional occupational pension schemes as a result of their action on pensions and other matters. There is also the problem of personal pensions, for which I do not blame the Government; and the drop in annuity rates, caused partly by actuarial calculations and the fact that people are living longer, and partly by lower interest rates and yield on gilts. The latter factor is becoming a matter of common comment in the press and is bothering many people who are shortly to retire. It is clear that the overall cumulative effect of the various changes since 1997 has been disadvantageous to pensions and will ultimately be disadvantageous to pensioners. I regret that the Budget has done nothing to put that right.
After 24 hours, I now understand—finishing my speech where I started it—why I was bamboozled by the Budget. However, I know also that the reality of the Budget will become apparent when people read its small print and experience its impact. It will look a very different Budget then.

Mr. Martin O'Neill: Yesterday's Budget has done more to help relieve family poverty than probably any other Budget in the past 30 years. The Budget offers, for the first time in many years, a clear chance to those


who are in low-paid jobs, or who have no job at all. It is little wonder that the Child Poverty Action Group said that the Government are genuine in their commitment to reducing family poverty, and that the Budget will take about 700,000 children out of the poverty trap, once and for all.
Such praise for a Labour Government from the Child Poverty Action Group is rich praise indeed. In the past 25 years, that organisation has been among the best-focused critics of Government, regardless of colour. I also well remember the problems that my right hon. Friend the Member for Birkenhead (Mr. Field) caused previous Labour Governments, in the 1960s, through his analysis of how those Governments tried to attack family poverty.
In discussing working people and their life chances, we should start by acknowledging that this Budget will make a bigger difference to them than any other Budget in many years. Certainly in my own constituency of Ochil, the Budget will benefit 10,000 families. The living standards of many pensioner families in my constituency will also improve.
The right hon. Member for South Norfolk (Mr. MacGregor) said—at least I think that he said—that the way in which the money had been allocated to pensioners to help them with heating—the £100 instead of the £20—could have been improved. We are aware of the problems—perhaps he knows about the problems better than most of us do. As I recall, he had occasionally to stand at the Dispatch Box to try to defend schemes that helped some parts of the country, but not others, or helped some people, but not others. We know that, from start to finish, those attempts were a shambles.
We realise also that if we are to deal with an issue such as providing winter fuel payments, it makes a lot more sense to make the benefit universal. The 11,616 pensioners in my constituency who will benefit from the Budget's generous treatment will realise that it is much simpler simply to get the money in hand. Better-off pensioners may do whatever they want with the money— they might even wish to give it to charity. They might choose simply to benefit from the Government's generous provision. However, for the poor pensioners in my constituency, who have been frightened to heat their homes, the prospect of receiving an additional £100 is one not to be missed. I think that most hon. Members appreciate that.
Many hon. Members have already said, quite correctly, that the Budget is about enterprise, work and employment creation. In the past month, my constituency has suffered just over 300 jobs in the textile industry. Although the losses—40 here, 30 there or 25 elsewhere—have been in various companies, the case of one company, Coats Viyella, is perhaps worth mentioning. It supplied Marks and Spencer. Once the contract between the two had been settled, it was assumed that—for a long time to come, if quality was maintained—Marks would buy the blouses that the women at Coats Viyella made.
We know the saga of Marks and Spencer. We are aware of its boardroom battles, and the drop in its share price. We know that it has lost its direction as a company. We know also that it is no longer sufficient for Marks and Spencer to try the old trick of sending back all the stock

if there is one flaw in one garment—which was how it used to exercise stock control and get the stock burden off its back. Marks and Spencer now realises that that practice alone is not enough if it wishes to compete with the other high street retailers which import large quantities of stock. Marks and Spencer is therefore going elsewhere for its business.
I am not attacking or criticising Marks and Spencer's investment policy, or making a severe criticism of the wages that employees at Coats Viyella are being paid— although those employees are not overpaid, and some of them could probably benefit from introduction of the national minimum wage. Nevertheless, the fact remains that Marks and Spencer—because of the mess that it is in—is forcing textile jobs out of Britain. Those jobs would have been forced out regardless of which party was in power.
Other textile companies, including those that are operating at the upper end of the market, look not only to the United States, France and Germany as potential customers, but to Taiwan and the countries of east and south-east Asia. The Japanese are not buying a new cashmere sweater, or any other sweater, every time they plan a trip to the golf course. They are not spending money as they were. The situation in those countries is part of the reality in the downturn in demand for United Kingdom textiles.
It comes a bit rich for a Europhobe, such as the right hon. Member for Wokingham (Mr. Redwood), to criticise the Government's approach to the negotiations on bananas or the cashmere industry. Certainly, both in Scotland and elsewhere, there is frustration and impatience about the plight of textile workers as a consequence of the banana negotiations. However, let us not forget that the Conservative Government brought the original banana appeal.
There is no disagreement on the banana negotiations between us and the French. There is no disagreement on it between the United Kingdom, France and even Ecuador— which, although it is one of the mainland Latin American banana producers, is not one of Chiquita's customers. Ecuador is just as much under the cosh as the African, Caribbean and Pacific countries are. It is a complicated issue, and it does not do to simplify it, to try to make a party issue of it in the House.
Perhaps the current Administration have a better relationship with the Clinton Administration than the previous Administration had. Although it would not be difficult to improve on the previous Administration's relationship with the United States Administration, we should realise that other forces are also at work. I think that, in a Budget debate on trade and industry, it is harmful to dwell unduly long on the issue.
The Government have been attacked because we have not given away enough money—only £1 billion—and should have given away more. If more money had been given away—I ask Opposition Members to consider this—what would have been the reaction of the Monetary Policy Committee, at its next meeting, when it considers reducing interest rates? Would an interest rate reduction be the consequence of massive fiscal largesse? In today's press, Adair Turner made a reasonable point when he said:
We asked for a boring budget and this is not a bad result. The fiscal balance is reasonable.
The Monetary Policy Committee has made successive interest rate reductions, to give the country an injection of confidence. In the past month, the MPC's message has


been quite clear: "We are not going to cut interest rates this month, but will let the Government take on the responsibility of increasing business confidence."
When one examines not only the Red Book fine print but the proposals announced today by my right hon. Friend the Secretary of State for Trade and Industry, one begins to see from where new businesses will come, and where Government assistance will be available.
Hon. Members have mentioned the new tax rate for small businesses. Let us face it: the majority of businesses that collapse are fledgling businesses. We have to do two things in the United Kingdom: first, help fledgling businesses through the very tough period when they are starting and profits are not very great; and, secondly, remove the stigma of failure from businesses and business people who fail. We have to make people realise that they should get back into business at the earliest possible moment and give them access to the maximum financial support.
I was interested in the point made by the right hon. Member for South Norfolk about the number of names that have been given to small business support organisations. However, we now have a plethora of organisations, something which we did not have when the right hon. Gentleman had responsibility for the issue. Previously, there was the Small Firms Service and nothing else; there was not the support system that we have now. There were occasional bits of support from the chambers of commerce and there was a wee bit from the DTI, but not much else. Nowadays, we have business links, about which we do not disagree across the Chamber.
We need a formal structure that can directly advise Government of the needs of small businesses. I am happy to welcome the establishment of the Small Business Service—I acknowledge that it is another agency, but it is one which is worthy of our support. It will be able to provide small amounts of money and appropriate advice. For businesses beyond the early stages of growth, it will be able to provide appropriate managerial skills supported by funding from outside. Companies that need experienced hands during a worrying period will have access to people who are used to running bigger businesses.
I could go through the whole Budget, but, in the short time at my disposal, I will not abuse the courtesy of the House, so I will touch on one important area. Much is made of our attempts to meet the Rio and Kyoto targets. The carbon taxes are probably a more sensitive way of meeting them than a blank energy target such as the multiplier. The Marshall report was a model of lucidity and fairness.
The Government have picked up the points on fiscal neutrality and they have nodded in the direction of the Institute for Public Policy and Research report, which suggested that if there was a reduction in national insurance contributions from employers, something like a quarter of a million jobs could be created. The Government's proposals strike a reasonable balance between the carrot and the stick. I hope that if the Government's proposals are successful, we can see some easing of the problems facing the road haulage industry.
Most of us who have been in the House for any time know that the road hauliers are the biggest crowd of whingers under the sun. We are largely inured to their pleas and complaints. However, I am almost concerned

by what they are saying now. The imposition of tax on fuel is affecting some small hauliers such as those in my constituency who take goods down to England and bring loads back to Scotland.

Mr. John Swinney: Will the hon. Gentleman give way?

Mr. O'Neill: I am sorry, the hon. Gentleman will appreciate that I do not have time.
Those hauliers find that their business is being taken by lorries coming over from France loaded with fuel that is far cheaper. There is a problem here and we have to balance prices up. We have to recognise that there is a split between the needs of the environment and the needs of the Chancellor.
I should like to think that we could be looking at the question of the trading of permits. That was one of the issues that Marshall considered in his review of energy taxation. It is an interesting market, of which Britain could corner a bit, but, more important, it would give us greater flexibility in emission control. To deal only with one part of the Marshall report is short-sighted.
We see a Government who recognise that we shall no longer be able to depend on the construction of steel mills or massive textile mills to mop up the employment of our people. We need small, effective businesses, and I look forward to continuing debates on e-commerce and the like, which are in their infancy and are only nodded to in the Budget. I know that that is part of the Government's programme. I see the Budget as an important step this year. I welcome it and hope that, by this time next year, we shall see that the small amounts that have been made available—if they were large amounts, the Government would be attacked for providing subsidies—for support and assistance to small businesses and industry in general, and the climate and stability that the Government have created, are the greatest aspects of the Budget. I welcome it.

Mr. David Chidgey: I am pleased to see the Secretary of State still in his place. It is unusual to see a Secretary of State here this late in the day. I am grateful, and I compliment him on being here. There are some things in the Budget that we can welcome.[Interruption.]In spite of Ministers' interventions from a sedentary position—although we always say with the Minister of State that we are not sure whether he is sedentary or not— I will try to get on with my speech.
The Chancellor has shown some recognition of the difficulties facing our economy, and we welcome that. We obviously applaud the fact that the aims that he sets out for tackling those difficulties are close to our own in many respects. However, aims are one thing and the means to achieve them are another. It is on the means that we have some disagreement with the Chancellor and some concerns. Some of the means that the Chancellor proposes run the risk of being clumsy, unfocused or, at worst, ineffective. That is not only our view but that of a number of respected analysts, not least the Institute for Fiscal Studies which, like us, has repeatedly warned of the problems building up in the economy. In earlier exchanges, the Secretary of State expressed his doubts


about the IFS view, but we hope that he will tell us why he does not accept that the IFS has genuine reservations about some of the measures in the Budget.
The Chancellor's statement and the Red Book set out many of the problems in our economy in stark relief. They concentrate on poor productivity, low investment in research and development and low skill levels. Earlier today, the Secretary of State issued a statement on competitiveness. It is a good read. I had the opportunity during earlier exchanges to read it, and it was more enjoyable than the speech from the Conservative Front Bench. The statement refers to milestones and target dates for the process, but nowhere can I find targets for outcomes. I put that point back to the Secretary of State. I know that it is difficult, challenging and dangerous for the Government to set down outcomes, but if we are serious about improving our competitiveness, we should ask for a little more from the Government.
The United Kingdom produces less per person than other major economies. As was mentioned earlier, there is a gap of 40 per cent. between our productivity and that of the United States and more than 20 per cent. between our productivity and that of France and Germany. It reflects weaknesses of long standing in our economy. I do not blame the Government for that, but they recognise it, and I expect them to propose some positive measures to do something about it.
We invest less in research and development than our competitors. The United States invests 50 per cent. more as a share of GDP. It is in the Red Book, so it must be true. The United States and Germany invested 40 per cent. more per worker on new capital equipment than we did in the last economic cycle. Those are the stark facts. Those are the problems. Added to that, the skills gap in the United Kingdom is fast becoming a chasm. Twenty-two per cent. of our adult population has poor literacy skills—twice as many as in Germany.
In spite of the Chancellor's protestations to the contrary, he has been forced to admit that the predictions that we made earlier in this Parliament about the plight that manufacturing industry would suffer were right. He now accepts that manufacturing is in recession and that the recession will be quite deep—1 to 1.5 per cent. in 1999. The result will be unemployment in what is normally a skilled sector. Instead of being flat, as the Government predicted, unemployment will rise by about a quarter of a million in the next two years. That is a worrying figure, particularly for those involved. Hon. Members on both sides should show genuine concern about that, not just try to score cheap points. It is a huge problem which Parliament should address.
The Chancellor should not just carry on saying that the problem is all due to the collapse of the global market and the economic failures in Asia, Russia and Latin America. Those factors have not helped—no one is suggesting otherwise—but we export more to the Netherlands than to those three areas put together. Treasury figures show that business in our key export markets is growing at nearly 6 per cent. a year. Sadly, our take-up of that business is growing at only 0.5 per cent a year.
In our key export markets, British business is missing out on opportunities for growth. The reasons are crystal clear—the high value of sterling and high interest rates.

Sterling is still 10 per cent. higher than its level when the Government came to office. No wonder the export forecasts of companies in my constituency have dropped by up to 50 per cent. this year. With interest rates 1 or 2 per cent. higher than in the rest of Europe, the extra cost of investment adds to our uncompetitiveness.
The Chancellor knows what he needs to do. It is the word that dare not speak its name. He knows that a clear commitment to a programme for Britain to join the euro would remove those burdens of an over-valued pound and high interest rates at a stroke. The boost that that would give to British industry would leave the gimmicky tinkering measures in the Budget in the shadows. We would get some real progress straight away.
The Chancellor has set out a wide range of measures that command broad support in principle from various sectors of industry and commerce. However, we must try to determine their impact in practice. We need to quantify and qualify the measures that he has set out. The Government have proposed a new small business service to co-ordinate advice and support small and medium enterprises. We are told that it will be staffed by civil servants and people drawn from business and that it will help business to comply with new Government regulations. That seems like an admission by the Government that the host of new regulations that have been drawn up by one group of civil servants are so complex that we need another group of civil servants to explain to business what to do about them. That is not what the Government intended, but it is beginning to look that way.
Would it not be better to have simpler, clearer regulations that were kept to a minimum? The Secretary of State for Trade and Industry and the Prime Minister have both said on the record that they want to modernise and simplify regulations. We should be able to see that happen in practice, rather than passing legislation that adds more regulations to the statute book and more burdens to business.
We need to know how the new Small Business Service will operate. Will it be just another centralised quango controlled from Westminster, or will it get to grips with the needs of small businesses? I hope that the Government will follow the best practice of the American model. It has not been mentioned so far, but I am sure that the Secretary of State is well aware of the practice that I am talking about. The stated objectives of the United States small business administration scheme are to aid, counsel, assist and protect the interests of small business. It aims to ensure that small business gets a fair share of Government purchases and contracts. It makes loans to small business and small investment companies, working with banks and lending institutions to provide loans and venture capital to small firms which cannot secure financing through normal lending means. It is a proactive organisation which is not there just to explain the red tape that the Government have introduced. It is not a centralised organisation. There are 900 small business development centres across the United States servicing more than 500,000 small firms, in partnership with federal, state and local government and community and private sector groups.
The American model works. If we are going to follow their best practice, the Small Business Service must have a network of regional centres working in tandem with the regional development agencies. The emphasis must be on


providing advice and support from the established business community to new entrants, not more red tape from bureaucrats based in Whitehall.
We welcome the Chancellor's proposals to widen employee share ownership. We have long argued for an expansion of share ownership as part of our belief in developing a stakeholder society. Improved access to, and tax relief for, employee share schemes will help to align the interests of employees with those of managers and shareholders. It will help to spread incentives across the board. However, there are some problems to overcome. If new employees are to be offered share ownership, it helps if the share value is rising. In too many cases, the share value of small firms has fallen significantly. Employee share options are not attractive if the option exercise price is higher than the share market value.
An increase in employee share ownership is unlikely on its own to change the City culture of demanding a quick return on investment. As long as institutional investors and investment fund managers are driven by a need to maximise dividends in the short term, there will be little room to invest profits to gain stability and long-term growth. We have to change that culture.
The Chancellor has put forward some novel ideas on company taxation, targeted on reducing the productivity gap. They are aimed at small firms, but they will have little effect on aggregate research and development or investment, because the bulk of both is done by large firms. I asked the Secretary of State earlier about the rationale of targeting the incentive of research and development tax credits on small firms. It will be cheaper to implement than a scheme that applies to all firms, but it will also have much less impact on the economy because, although small firms employing between one and 99 people accounted for 36 per cent. of employment last year, they carried out only 9 per cent. of total business research and development. The Government are hitting the wrong target. Only just over half our small and medium firms are innovators, compared with nearly three quarters of large firms. Any extra incentives should be targeted where there will be most take-up.
The Government want to improve capital allowances for small firms. A move from 25 per cent. first year allowances to 40 per cent. implies an increase in the present discounted value of capital allowances of less than 3 per cent. Given that SMEs account for a relatively small proportion of investment in plant and machinery, the impact on the total level of investment is unlikely to be significant.
The measures on venture capital challenge are interesting. In 1997, UK venture capital firms invested more than £4 billion—£3 billion in this country. However, the investment in early-stage companies was a mere £159 million, of which only £58 million was in start-up firms. We should question the extent to which the provision of tax incentives for the formal venture capital sector affects early-stage financing for start-up firms. Estimates suggest that, in America and the United Kingdom, informal venture capital provides more finance to start-up firms than does the formal sector. We need to learn from that.
We welcome the extra money for individual learning accounts, to go to up to 1 million account holders. However, we have two main concerns. First, what will

the administrative costs be? Secondly, how much of that £150 million will result in new training rather than simply a transfer of people who have done the training anyway?
The proposals for greater incentives to recruit high-quality managers come without any argument about whether equity-based remuneration is disadvantaged under the current tax rules, without any evidence of the success of past schemes and without suggesting how the incentives could be used selectively for certain managers without being susceptible to abuse. We need clarification on that. Many hon. Members will remember the effects of the original discretionary scheme, which operated until 1996 and allowed employers to target specific employees rather than offering a scheme to all employees. The previous Government abolished that on the recommendation of the Greenbury committee, whose report argued that there was no case for one form of remuneration to receive preferential tax treatment over another. Are we going through the loop again? We should be clear.
The Secretary of State for Trade and Industry has made a great deal of the importance that the Government place on research and development. Yet the examples that he has given to me recently—particularly on one of our most important industries, the aerospace industry—do not tie up with what he says in the House. I am sure that he does not mean to mislead us. Many assume that the aerospace industry comprises a few giant international companies, but the truth is far from that.
It may well be that the industry employs more than 120,000 people, has an annual turnover of more than £15 billion and contributes significantly to our balance of trade. However, three quarters of aerospace firms in the UK are small to medium enterprises. It is vital that then-interests in investing and research and development are maintained and encouraged. At present, we invest in aerospace research and development proportionately less than any of our major European competitors.
I have raised this question with the Secretary of State, who has agreed that Government investment through the civil aircraft research and technology demonstration programme has been vital to the industry, and has made a significant contribution to competitiveness in the industry, and to other industries outside aerospace. He has said also that we invest far less than our competitors from DTI funds into the industry.
The Secretary of State could not tell me whether he would maintain the minimal budget of £24 million, which is under threat. I think that I am right in saying that £24 million is about half the level invested in France, and a quarter of the level invested in Germany. We are talking about one of our few remaining world-class industries— providing a bright future that could spread research and development opportunities and synergy through manufacturing—and the Government cannot make up their mind whether to keep the tiny, miserly budget on which the industry depends for innovation and new ideas.
My concerns are that the Budget fails to tackle some of the major concerns of industry. The Government claim that prudence is a virtue—maybe it is, but lacking ambition is not. The Budget tinkers around the edges, and tends to ignore the major issues. My party's priorities are to reduce the burdens on business and to simplify the tax system. We want to introduce annual tax audits to reinforce those aims, and to state clearly the extra costs of administration on business.
Our aim is to have less regulation, not just better regulation which burdens business. We want to simplify the tax system, and bring in higher tax thresholds—not introduce targeted tax wheezes which will have a limited effect in specific areas. We want a firm commitment to a programme for entry into the euro, which would boost exports and industry at a stroke.
We recognise that the key to Britain's future success lies in improving the level of skills and education of the work force. Rather than playing to the gallery with a penny in the pound tax cut, we would have invested the £5 billion that the Chancellor has given away on education, targeting the money on reducing class sizes, improving standards and creating the skills base that is vital to our long-term economic future.

Mr. Tom Clarke: Yesterday, the Chancellor of the Exchequer began to challenge the biggest plight of our time in modern Britain—poverty. It coincided with measures aimed at reducing poverty abroad, too, but I begin by talking about domestic issues.
Coming from a constituency such as Coatbridge and Chryston in what was once the industrial heart of Scotland, I know that it is crucial to address some of the problems faced by those people in what, hitherto, have been known in many minds as the forgotten parts of Britain. In those parts, the people have often felt that politics and government have left them behind. Now, I believe that those problems are beginning to be addressed.
We may have begun to turn the corner. It is long overdue, and that makes the job so much harder. We cannot shirk from the challenge that presents itself in areas such as mine. Our people are not the underclass— they are indeed "our people". For too long, we have failed to acknowledge that it is in all our interests to offer hope to the poorest people in this country—as the Chancellor did, quite magnificently, yesterday.
An economy in which a significant proportion of the population is unable to fulfil its potential is far poorer and far less productive. Real hope lies in providing a decent standard of living for all, and real opportunities to all who want—indeed, need—to work. We need to help people who have been left out of too many Budgets for far too long: those who have worked hard in the past; the nation's elderly; those families who seek, but are unable to find, work; and, of course, those children of the poorest families who represent this nation's future.
Those children do the worst in life. Their chances of upward mobility, of something better, are, as they see it, no better than they were decades or many Budgets ago. In the schools, through no fault of their own, they often lack the educational skills that enable them to progress and to improve their life chances. Their health standards are often way below those of their friends. No one—still less a child—deserves that disadvantage.
At last—less than two years into the life of this Government—we have the signs that the Government believe that that change is not only necessary, but possible. Many of the resources were switched yesterday, for the first time in decades, to improve the chances of

those very children. My right hon. Friend introduced measures such as the new children's tax credit, which will help all families—that is welcome—but clearly benefits the poorest children most. That is not just welcome, but necessary.
We cannot tolerate a society that is prepared to write off the potential work force through poor education. We need to employ the potential of all our people, and yesterday's commitment to utilise modern technologies in all schools was a major step in the right direction. The new deal for the unemployed was an excellent start, and we are seeing the fruits of the windfall tax on the utilities being shifted to help provide opportunities to those at the opposite end of the financial spectrum. I believe that to be right. If equality of opportunity is to mean anything, everyone must have that equal chance.
We must ensure that all the unemployed have access to skills and to work. That includes those who have worked for many years, but have, unfortunately, lost their job. Large numbers—very large numbers in my constituency—of men and women aged over 50 have, in effect, been driven out of the work force over the past 20 years as redundancy after redundancy has swept up millions of our older workers. At that time, the Government of the day had the benefit of what seemed to be almost inexhaustible revenues from oil, which they used not to invest in capital and jobs, but to pay for massive unemployment, and all the economic and social tragedies that went with that. There are now twice as many men over 50 without jobs as there were 20 years ago, and about 40 per cent. of men aged over 55 have no job at all. The plight of this group is one of the unspoken tragedies of our time. I am extremely glad that my right hon. Friend the Chancellor has recognised their needs. Not only do they need to work; we need their talents, experience and knowledge and their contribution to what ought to be their society as well as ours.
That is why I was particularly pleased about the commitment to provide opportunities for people over 50: a voluntary scheme, money to help with retraining and a minimum income guarantee mean that thousands, not least in my constituency, will be given the chance to relearn the skills needed to re-enter the work force with a much better chance of a real job. Creating employment opportunities will not only promote economic growth but ensure that the benefits of that growth are shared throughout society, through families and local communities that are often crying out for the renewal and regeneration that my constituency and many others desperately need.
People will be grateful for this opportunity, which represents enduring Labour values: the equal wealth of all individuals and the recognition of each person's dignity and potential, with everyone making the most of their talents. That is radical, realistic, right and consistent with the Budget.
We must remember that many people have worked all their days and are now retired. In the past, the pensioners were left out of the picture. It is unacceptable to have pensioners living in poverty, and in many cases they are in dire poverty. They have the right to a decent standard of living. They have earned it by working hard for many years. They do not deserve to live in a situation in which they have to choose between heating their homes and eating.
My right hon. Friend the Chancellor has responded to that situation with the warmth that we would have expected of him. I unreservedly commend the commitment to switch resources to the poorest pensioners, who are to receive a fivefold increase in their winter allowances to help to pay their bills. That is right, and long overdue. In my constituency, it will benefit more than 11,500 pensioners. I have to say with candour that some of them are the very poorest of pensioners. I am delighted that they are being recognised at last.
A minimum income guarantee linked to earnings rather than prices is long overdue and is an imaginative and major step forward in challenging the poverty that nobody deserves to endure; and challenge poverty we must.
Poverty—grinding, demoralising and simply wasteful— has, I am afraid, become the reality for thousands of people of all ages, not only in Scotland, not only in Britain, but throughout the world. It is time that we took action to change that, and change it we can. We live in a time of uncertainty but also of enormous opportunity. We hear that the ever-globalising world economy is creating rapid political, economic and technological changes. That is good. It is also creating vast amounts of wealth, which provides opportunities for all, but we have to ensure that it goes to all.
I am proud that the Government are taking a lead in tackling those issues head on, to ensure that the people of today and tomorrow, here and throughout the world, are given the standard of living that any human being is entitled to expect. We may not hear much talk of redistribution, but I have always thought, like my constituents, that actions speak louder than words. The Government's actions as demonstrated in the Budget are rightly targeted at helping those who really need that help. In that spirit, I welcome it and support my right hon. Friend the Chancellor.

Mr. David Davis: I have some sympathy with the aims of the right hon. Member for Coatbridge and Chryston (Mr. Clarke), but I spoke at some length last year on the mathematics of the working families tax credit, so I shall not follow him down that route and bore the House twice on the same subject. He intimated that the Government had got good headlines out of the Budget, and he was right. However, it is true that Budgets that are praised in March are often pilloried by May, and I suspect that that might be the current Budget's fate.
It is hard to see the wood for the trees—or, perhaps, to take a line from my right hon. Friend the Member for South Norfolk (Mr. MacGregor), the mirrors for the smoke—following the Chancellor's performance yesterday. Perhaps the wisest course is for me to talk a little about the Government's long-term financing and the effects on the real economy.
As the Economic Secretary is on the Treasury Bench, I want to make a public accounting point. The Finance Act arranges that the National Audit Office audits those parts of the Budget that the Chancellor directs. Some assumptions were audited in the past, and others this year. A valid assumption last year is not necessarily valid this year, and the fact that something has been audited in the past does not make it right today. It is rather like having a public company in which the auditors are allowed to audit only those subsidiaries that the finance director picks in any given year.
Will Treasury Ministers consider amending the Finance Act so that the audit of the Budget is under the control of the Comptroller and Auditor General rather than the Chancellor? That might lead to better public finances and more confidence all round.
I have some concerns about the Government's overall financial strategy. Over the decades since the war, every Government have faced—not unreasonably—welfare, health and education expenditure that has grown faster than the economy. That has been funded by taxation going up as a percentage of gross domestic product, but the process has hit a limit. The world's most successful economies have public expenditure of about a third of their overall economy. Ours is about 40 per cent. When the figure gets to 50 per cent., even countries as powerful as industrial giants such as Germany stagger and fail. There is a serious limitation.
Another method of funding is by transfers in spending. For Britain and other countries since the war that has largely occurred by transfers from defence—expenditure on which has halved as a percentage of GDP over the past 30 years from 6 per cent. to about 3 per cent.—primarily to welfare, but also to education and health. We have already reached a minimum for defence spending.
Too many Governments, including even the Government in which I was a Minister, took too much of a peace dividend at the end of the Soviet Union's hegemony. The present Government have gone even further—unwisely, in my view. The proper dividend of peace is peace, not money for other expenditure. That source of funding, then, is also running out.
A further option for funding is privatisation. The previous Government led on that, and Labour opposed it virulently, although it has now been persuaded to support it. Privatisation was a useful source of funds when nationalised industries accounted for 11 per cent. of GDP, but now they account for only 2 per cent., so that source of funding is limited.
What are the Government's solutions? We have heard a great deal about their stealth taxes, and even the Prime Minister admitted last week that the burden of taxation is going up. I will not comment on that, as others will have plenty to say about it. The national asset register is a Government innovation of which I rather approve. It identifies assets that are less than useful to the state and sells them off. In effect, it is the garage sale of the century of public assets. That is nearer to the sale of the family silver and the Canaletto to which Harold Macmillan referred than privatisation ever was. The plan is to raise almost £4 billion a year in that way in the next few years, so it is a significant component of the Government's funding. I think that it is a good idea. However, it will be much harder to deliver on than the Government believe. Indeed, last week a Liberal question identified that only about half a per cent. of the asset base was sold in the past year, so it will be difficult.
I am concerned that the Budget has coupled the policy of stealth taxation with a new policy of covert debt—a potentially dangerous cocktail which could burden our economy.

Mr. Geraint Davies: Will the right hon. Gentleman give way?

Mr. Davis: I am afraid not, as I have only 10 minutes in which to speak. Normally, I would love to give way to my colleague on the Public Accounts Committee, but not today.
That cocktail could burden our economy in much the same way that it did in the 1970s. The pressure on welfare, health and education spending means that the Government will be tempted to finance much of their capital expenditure through the private finance initiative. That method avoids large sums of capital expenditure having to be found and spreads the costs over the life of the project.
The PFI has many virtues—after all, it was a Conservative policy in the first instance. The private sector brings good management, innovation and enterprise to the provision of public services. Properly used, it is a good thing, but the temptation will be to provide public services and public service capital assets on the never-never. Just as someone who accumulates hire purchase payments carelessly loses control of his or her financial affairs, the Government could do the same. I draw the attention of the House to the fact that the Red Book shows that they are planning about £11 billion in PFI expenditure. Every time that the Government undertake a PFI project, they commit tomorrow's taxpayer's money. If that is done imprudently, it will shackle the hands of future Governments every bit as tightly as though they had borrowed billions of pounds. Just like unfunded pension liabilities, that could grow to be an intolerable burden on the nation's finances. It concerns me that we may have a Chancellor who is living for the moment and forgetting his responsibilities to future generations in that respect.
The Chancellor may be behaving responsibly—I simply do not know—but to prevent that scenario he must set an explicit limit on how much capital expenditure he finances on the never-never. If he does not do so, his golden rule on capital expenditure will be meaningless. Clearly, stealth taxation accompanied by covert debt mean that today's expenditure will be financed not merely out of tomorrow's pensions funds, which we all know about, but out of tomorrow's taxes. That would be irresponsible and improper, and I urge the Government to avoid it by having proper rules to govern that type of expenditure.
On the longer-term aspects of the financial package that make up the Budget, rather than the details that my hon. Friends mentioned, this year, because there has been a change, assumptions relating to the labour market have been audited by the National Audit Office.
Incidentally, I broadly welcome the measures for the employment of people aged 50 and above—not merely because that decade is facing me, but because those people are socially valuable. In many ways, I think that the measures will be more effective than some of those aimed at younger members of the work force. The 50-year-old-plus man or woman is a valuable member of society and could continue to give a great deal.
However, within the labour market issues and assumptions in the Budget, the largest reduction in expenditure over the Red Book period—about £9 million—results from lower social security payments. That reduction arises because last year, not this year, the Department of Social Security told the Treasury that its assumptions for social security expenditure looked pessimistic. Fewer people were claiming income support and the job seeker's allowance than had been expected and fewer people were turning up for interviews. Why?

It is a result of the reforms that were initiated by the Conservative Secretary of State for Social Security in the previous Government. I will give this Government credit: where they have continued and toughened up those reforms, as they have occasionally done, they have reinforced that case.

Mr. Deputy Speaker (Mr. Michael Lord): Order. The right hon. Gentleman's time is up.

Mr. Michael J. Foster: I shall begin by referring to the car industry in the west midlands. The area is extremely reliant on that industry—and not merely on the huge car factories, such as Rover at Longbridge. There are many smaller component factories, such as Metalcastings Ltd. in my constituency, which is a classic example of a small manufacturing company that relies heavily on the Rover Group as a customer. I speak as a member of the third generation in my family to work in a car factory. I urge the Government to do what they can to support Rover on behalf of the many component manufacturers in my constituency and elsewhere in the west midlands.
The car industry is not a lame duck. It is not a primary industry with low profits, but one capable of being highly value-added, with high skills and a high-tech base. The industry has huge export potential and it should be encouraged. I ask the Government to ignore the editorial in The Daily Telegraphlast month, which stated that "BMW should close Longbridge" and that
Subsidies simply do not work".
The small and medium-sized enterprises that rely on the thriving car industry will welcome the Budget because it will undoubtedly make it more profitable to invest, but they also need a secure business environment in their sector so that they have the confidence to do so. I am pleased to note that the Government have recognised that. The Red Book refers to key investment mechanisms and goes on to mention spill-over effects, where one firm's investment creates new growth opportunities for other firms. That is perhaps best seen in the development of clusters of firms, where the opportunity for a particular firm to make profits depends crucially on the presence and prior investment of other firms. Rover, Longbridge, could be a classic case of that, if it gets the grant aid from the Government.
On the proposals for small businesses, I am pleased that the Chancellor has had time to read the December 1998 small firms survey that was conducted by Hereford and Worcester chamber of commerce before he finalised the Budget. Clearly, this Chancellor has listened to what those small firms had to say in the survey. The new rate of reduced corporation tax for small business start-ups and the lower rate of corporation tax mean that retained profits are more available for investment and that there is a greater reward for enterprise. A feature of the United Kingdom economy is that small firms rely heavily on retained profits for their investment plans. Indeed, the survey found that 56 per cent. of the small firms used only retained profits for their investments and more than half thought that it was their most important source of finance.
The extension of the 40 per cent. first-year capital allowance adds to what previous Budgets have done to give incentives to invest. Some people argue that the


measure affects only the timing of the investment, making marginally profitable projects more viable. However, coupled with the economic stability that has been brought about by Bank of England independence, prudent fiscal management, an end of boom and bust and the positive growth forecast from the Treasury, that continued tax relief may affect the volume and not merely the timing of the investment.
Of special note is the small business service and the extra help with venture finance. In the survey that I mentioned, about 80 per cent. of respondents claimed that they needed more help from the Government in that area, 36 per cent. wanted easier access to the small firms loan guarantee, 35 per cent. wanted the Government to promote a wider range of finance options, and a further 36 per cent. wanted easier access to financial information and advice. Those small businesses will thank the Chancellor for his Budget. Those are the findings of those who are active within the chamber of commerce. Imagine what they would be for those who are not active members—those who are perhaps too busy to seek such advice.
I particularly welcome the help for automated payroll support. I spent six years teaching night school students how to do manual payroll calculations and I can assure the Government and every small business out there that computerisation works. That is a further example of the Government's reduction of the burdens on business by enabling businesses to process a piece of essential work. It adds to the already enlightened approach that the Government have taken in bringing together the Contributions Agency and the Inland Revenue, an act which was welcomed in the survey to which I have referred.
I have a few remarks to make on employee share schemes. I worked in the car industry for a company that gave employee shares to the workers—me included—and I saw at first hand the real interest that employees began to take in the financial success of the company. They love sharing in the good times. It is interesting to see workers on the production lines in the huge car factories of the west midlands scanning the newspapers to find out the daily share price of their holdings. They also quiz their line managers on what has caused particular movements. That interest and involvement should be admired and encouraged.
I taught accountancy at a college, and that included teaching about labour remuneration schemes—or new labour remuneration schemes as I used to call them. Employee share schemes clearly show a sense of partnership and team work in a business. They enhance other productivity measures that the Government are keen to see in industry. In particular, they will enhance new investment opportunities that will result from reduced tax levels.
Coupled with the works council directive and our fairness at work legislation, the Budget will equip the United Kingdom for the 21st century with workers who know that they will achieve more working together than acting individually within an organisation. The employee share scheme meets all the basic criteria of a good remuneration package. It is fair to all employees, because they are all eligible. It has a regular reward because dividends can regularly be converted into more shares. It is certainly easy to operate, and it focuses on long-term commitment to a company.
The three-year commitment if full tax advantage is to be gained will mean that, at a time when many small businesses are suffering from skill shortages, workers may commit themselves for longer to particular organisations. That will reduce the high costs of labour turnover that small firms face.
The Budget is good for business. It lowers business taxes, it improves investment incentives, it takes measures to improve productivity and it gives extra training opportunities. All that has been done the new Labour way. Employees and employers will be able to work together, and the Budget will complement existing Government policies. In short, a Government of joined-up thinking have produced a joined-up Budget.

Sir Raymond Whitney: The hon. Member for Worcester (Mr. Foster) believes that the Government are good for business. I fear that he will be disappointed in future. I am sorry about that, and I shall tell the House my reasons for thinking so later.
We are accustomed these days to the phrase "spin doctor". It is a feature of modern politics, and yesterday proved that it has become a feature of economics and Budget presentation. The Chancellor of the Exchequer, however, qualifies less as a doctor of spin than as a doctor of obfuscation. It was he who gave us the famous phrase about neo-classical endogenous growth theory, and he has talked about the symbiotic relationships between growth and much more. He has progressed from that to the performance that he gave yesterday: the words were simpler and crisper, but they were no less misleading.
We must carefully consider the reality beneath the golden words of the Chancellor. Two points may be briefly made. The first concerns the tax position and the reality that my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) so successfully exposed in his exchanges with the Prime Minister today. The reality is that Labour's first two Budgets involved an increase in taxes of nearly £41 billion, and in the coming year taxes will rise by more than £7 billion. Stealth taxes are an important theme, and we should hear much more about them.
The second reality obscured by the Chancellor's carefully phrased delivery was the matter of the golden legacy, on which we have already heard some exchanges this afternoon. It is a sensitive point with the Government. The going concern that took over in May 1997 will of course always reject the proposition that the Conservative Government left a golden legacy, so I must draw Labour's attention to The Times yesterday, in which Anatole Kaletsky wrote:
The real authors of Britain's present economic prosperity—and of the present Chancellor's good fortune—were Kenneth Clarke and Norman Lamont.
Mr. Kaletsky points out that automatic revenue growth is built in to the British system, which is ungainsayable, but which has not been said by Treasury Ministers, who seem always to try to reject a legacy that truly was golden.
Kaletsky also rightly makes a proviso—that the economy must not be in recession if automatic growth is to occur. That is one of the dangers that the Chancellor's seemingly solid edifice stands precariously against. In his projections for the next two or three years, the Chancellor


still relies on growth of 1 to 1.5 per cent., which is about twice the average forecast of well-respected economic commentators throughout the country.
There is surely no doubt that manufacturing industry is already in recession, or that it has been seriously damaged. Many of yesterday's measures will increase the damage to that unhappy sector. We have heard quoted many times the assertion of Sir Clive Thompson, president of the Confederation of British Industry, that an increase of £20 billion in business taxes has already been inflicted.
Business does not face merely taxes, of course. A bureaucratic burden is also being heaped on industry. I am not prepared to enter a Dutch auction between the present Government and their predecessor about whether there have been 3,000 more documents or 2,500, but we all know that there have been too many of them. That is certainly the view of British industry, and many quotations to that effect can be adduced.
Another danger manifest in the Budget is the temptation to meddle. In The Times today, Anatole Kaletsky cites the interventions that will burden and harass industry, saying:
Individually all these may be small measures, but taken together they seem to represent a covert triumph for the traditions of interventionist economic meddling and social engineering that appeared to be buried with old Labour.
That is true, and it is being said by an independent economic commentator rather than coming only from Conservative politicians. The Labour party still believes that everything can be done from Whitehall. We heard bland words from the Secretary of State for Trade and Industry about the necessarily limited role of Government, but by their deeds shall ye know them. As the Budget works out in the months to come, I fear that it will become all too clear that it spells bad news for industry.
There is another danger. The Budget will make it harder to continue the downward pressure on interest rates. If anything, it might put pressure on interest rates to rise again, when set against the inflation target. We all know that if that happens, the impact on the pound, on our export potential and on business and jobs will be hugely negative, coming on top of an already difficult situation for British exporters. That would have negative consequences should we approach membership of European monetary union, although I do not wish to go too deeply into that subject from the Conservative Benches tonight.
Like many Budgets in the past, this Budget received a warm reception on the day and the day after, but that means that in six months' time there will be wailing and gnashing of teeth. This will be a classic example of such a Budget.

Gillian Merron: It used to be the case that the Chancellor wore the heavy mantle of chief distributor of misery, entrusted with executing Budget provisions in a limited and predictable manner. However, now the headlines proclaim, "Flash Gordon", "Everyone's a winner" and "Brilliant". How Budgets, Governments and Chancellors can change!
The Budget is supported by good housekeeping, including a major reduction of the inherited national debt and the costs associated with it and a determined yet practical reduction of unemployment and its associated social security, health and other costs, none of which properly serve the individual or the economy. However, I noted that the Chancellor again failed to realise the fears of George Bernard Shaw, who wrote some time ago:
Give women the vote, and in five years, there will be a crushing tax on bachelors.
I wondered whether I should be generous and say that even Conservative Members would not have added that to their intended list of items such as food, books and children's clothing that were under threat of imposition of VAT, had the Conservatives won the election.
I especially welcome the Budget's impact on my constituency of Lincoln. More than 11,000 families will benefit from the further increase in child benefit plus the new children's tax credit. That will mean that the Labour Government, since coming to power, will have doubled the financial support available to children. More than 16,000 of Lincoln's pensioners will benefit from an increase in the winter allowance from £20 to £100 which, together with the other measures including the reintroduction of free eye tests—I strongly supported the local Age Concern group's campaign on that issue—and the lifting of many pensioners out of tax liability, will provide a better deal for pensioners than they have been used to for some time.
To achieve all that, support for business and enterprise must be a priority. I know that many in the business community will be pleased by the Government's practical responses to their needs, which Labour has listened to for some time. The business community will welcome the Budget announcements, including the tax reductions and credits, the new small business service and new proposals to increase share ownership, to help to increase productivity. Lindum Construction in Lincoln proudly announced such a scheme some time ago and I believe that it will be successfully replicated around the country.
I recently addressed business representatives at a busy chamber of commerce lunch. In discussion afterwards, I heard how business people genuinely felt a sense of stability that, slowly but surely, is rebuilding the confidence lost in the Tory years of boom and bust. Such confidence supports an American parent company's decision to establish a new manufacturing site in Lincoln. A year ago, I was pleased to welcome Sermatech UK to its new Lincoln facility, which employs some 33 people. Sermatech established that plan in partnership with Alstom Gas Turbines, which—incidentally—supplies the turbine that powers the Whitehall energy efficiency scheme. No. 10, the Ministry of Defence and many other key buildings rely on Lincoln's skill and technology for heat and light. That is a powerful position to hold. Sermatech has a positive future and I believe that it will be enhanced by the final Budget of the millennium.
This is a Budget for work. Lincoln has seen a steady reduction in unemployment, which has fallen by 15 per cent. in the past year. The new deal is part of that, and I am especially pleased that the over-50s will have an opportunity to benefit from a new programme to get them back to work so that they are not left on the scrap heap. Anglia Water last year invited me to support its 37 new deal young recruits and their mentors in Lincoln. I was


delighted to hear that since my visit, Gary Peck, a trainee leakage operative, has obtained a permanent job as an assistant surveyor. He is just one example of the powerful effect of a partnership initiated and funded by the Government. Gary's view is:
I wouldn't be in this position if it wasn't for all the help I've been given.
He is a bright young man with great potential: he just needed the opportunity of the new deal to get him into work. There are many more like him, who will benefit from the Government's determination to get people into work, including those who find it hardest to get their feet on the employment ladder.
On education, I especially welcome the £470 million investment to broaden access to technology for both children and adults. I was delighted to see that principle already in action at Ermine junior school in my constituency, which has a dedicated room with IT equipment for that very purpose. Especially impressive is the availability of the new technology to those in the local residential home. The friendships and exchange between the children and the elderly people provide an example of true and meaningful education.
I especially welcome the allocation of £2,000 to every school for books. I welcome it for the contribution it will make, but also for its directness. We all know what the money is, what it is for and where it is going. The path of previous allocations of extra funding for education from this Government has not been so clear in my constituency.
I also welcome the recent intervention by my right hon. Friend the Secretary of State for Education and Employment who has written to Lincolnshire county council to urge it to ensure that the additional Government provision is spent on education and, especially, to support schools so that resources can be spent directly on raising standards. Not surprisingly, the Conservative leadership of the county council takes issue with that point, but the issue is not only how much is spent on education— important though that is—but where it is spent and what it is spent on. I know from parents, teachers and governors—whether at Ancaster, Sir Francis Hill or any other school in Lincoln—that the education priorities voted for by the people in Lincoln and across the country at the general election are not being met in my constituency.
In contrast, yesterday's Labour Budget is just what the people voted for on 1 May 1997. It is a Budget which speaks of how all players, from the company director, through the NHS manager, to the pensioner or parent managing a household, can see and feel the links to and benefits from each other. I welcome the Budget with enthusiasm. It is a better deal for Lincoln and a better deal for Britain.

Mr. David Prior: As I listened to the Chancellor's Budget statement, my impression was of massive complacency, and that same complacency was exhibited by the Secretary of State for Trade and Industry this afternoon. There was more than a touch of Dr. Pangloss about both statements. Where have the Chancellor and the Secretary of State been for the past year? Do they have industrial companies in their constituencies? Are they aware that orders, sales and

profit margins are being squeezed, and that many manufacturing and engineering companies are laying off employees?
Almost worse is the impression that neither right hon. Gentleman has grasped the lesson that the country had to learn so painfully in the 1980s: we operate in a global marketplace, so we have to be the best by the best world standards. It is because this country embraced those two lessons that we were able to attract so many foreign companies during the 1980s and the early 1990s. The benefits of that investment, such as improved working practices and product quality, are still with us today.
Whereas the challenge in the 1980s was for this country to catch up with Europe, especially our competitors in Germany and France, today's challenge is no longer confined to Europe; we have to be better than our competitors in the United States, Asia, south America and other parts of the world. It is becoming increasingly widely recognised that the European way of doing business is not competitive. Take the case of Germany today: many large industrial companies are disinvesting from Germany and reinvesting in new manufacturing capacity in the countries of eastern Europe and south America.
We have to judge the Budget against that background because only if we get right the fundamental decision about what sort of economy we want in this country will we be able to afford in the long term decent pensions and public services and to achieve a high level of employment. Getting that judgment right is crucial, but I believe that, as we adopt an increasingly dirigiste style of government, with bigger government, more interference and more regulation, we build a higher costs base that will eventually lead to protectionism in Europe.
The lead measure in the Budget was the reduction in the headline rate of corporation tax. I welcome that, but have to point out to Ministers that the problem currently facing British industry and commerce is not the level of corporation tax, but the fact that our costs are too high to enable us to compete. Our regulatory costs, employment costs, transport costs, energy costs and administrative or bureaucratic costs have become too high.
Let me give a few examples. Take inspection costs in our abattoirs, which are going through the roof because of new European Union regulations, or the hygiene and welfare standards imposed on our pig and livestock producers. Take the effect of the minimum wage on a company in my constituency that employs a lot of casual workers and now faces the bureaucratic problems of filling in all the forms needed to comply with the minimum wage. Take the effect of the working time directive, which has had a big impact on companies that work in shifts, especially those that have night shifts. Take the effect of the increased recognition of trade unions. Most damaging are the new rules on unfair dismissal, which will deter many companies from taking on new employees. Finally, the social chapter is, in effect, a means of making all EU countries operate at the same level of uncompetitiveness.
When they took office, the Labour Government inherited a culture of business and entrepreneurialism—a culture which had changed dramatically during the 1980s and 1990s. We had embraced the new competition and were able to compete throughout the world. We have now taken a wrong turn, however: just as we were about to


embrace success, we have gone off in the wrong direction, towards a more highly regulated dirigiste form of government. I had hoped that the Budget would demonstrate that the Government had taken on board the lessons of the 1980s and early 1990s but, sadly, they have not.

Mr. Stephen Hepburn: I shall concentrate my remarks on the effects of the Budget on the northern region and the constituency that I represent. I shall explain how the Government's actions are continuing to improve the quality of life of the people in my area, by rewarding work and supporting families. However, first, I pay tribute to my right hon. Friend the Chancellor and his team and to the team at the Department of Trade and Industry who have worked since the beginning of this Parliament to bring about that better standard of life for the many and not the few. The many are the people on low incomes and middling incomes—the real wealth creators in this world.
The great thing about the Budget is that it continues that work in a spectacular way, by recognising and rewarding the central aspects of life—families and work—and putting great investment in public services. Families are given more by increasing child benefit to £15; 12,000 families in my constituency benefit from that. That increase plus the new child tax credit mean that families will be hundreds of pounds better off and that the youngsters in those families will have a better start in life.
The £40 billion for public services, such as health and education, was promised some time ago, but the fact that it was widely discussed before the Budget statement should not take off the shine. The importance of public services to the poor, who cannot afford private health services or to send their children to private schools, cannot be stressed too strongly. The modernisation of my local accident and emergency unit will be greatly appreciated; and the £2,000 for every school for books will be gratefully received by hard-pressed teachers and governors. The Budget also delivers a better deal for pensioners by increasing the winter fuel allowance from £20 to £100 which, taken together with the earlier cut in VAT on fuel and the minimum income guarantee, means that more than 16,000 pensioners in my constituency will be hundreds of pounds better off.
It is significant that the Budget rewards work by building on the new deal, which has already had an impact in Jarrow where it has halved both youth unemployment and long-term unemployment. The minimum wage will make hundreds of people better off, as will the l0p starting rate of income tax and the future cut in the basic rate from 23p to 22p. Taken together, all those measures mean that there will be more money for people to spend in the area. Individuals and families will be better off, with the result that the local economy will receive the boost it needs. The stronger the local economy, the more jobs are provided for local people.
We in the northern region, in the Jarrow constituency and on the Tyne, still rely to a great extent on engineering. We welcome the service industries, which have created valuable jobs, and we welcome the high-tech industries, because they represent the future and we have to look to the future. However, we have to remember that balance

is important in any economy, so I pay tribute to the employers and the workers in the north who have survived the bad times—the boom and bust under Tory rule.
It is a disgrace that the average age of a skilled worker on the Tyne is now 50. It is more important than ever that Tyneside and Swan Hunter get the Ministry of Defence work for which tenders are currently being submitted. If the £130 million tender for Royal Navy supply ships is accepted, work will be provided for hundreds of skilled men for many years to come. Perhaps more important are the opportunities that that will create for youngsters to learn skills and carry on the good work that made Tyneside great.
In my area, small businesses were set up as the larger firms closed down. Redundant workers used their skill and determination to provide a living, not only for themselves and their families, but for their work colleagues, whom they took along when they set up the business. Although many have gone to the wall over the years because of problems in the economy, some have survived. They have told me that they welcome the new climate of economic stability; they welcome the new deal, which has given them opportunities to employ people who they might not have employed in the past; and they welcome the cut in the small business tax rate to l0p.
With mortgage rates at a 35-year low, tax incentives to work and massive investment in public services— £40 million has been identified—people in the south of England must be asking why they did not listen before to those in the north and cast their vote for the Labour party. I am pleased that the good people of the south have now listened to those in the north and cast their vote with sense. I know that the Labour Government will not let them down: they are providing jobs and a good standard of living for all the people of this country.

Mr. John Townend: We live and operate in a global economy, and this country is very affected by the world economic situation. I find it strange, therefore, that the subject is dealt with only scantily in the Red Book, which devotes a mere two pages to it. I believe that the Chancellor's forecasts are too optimistic when one considers the possible dangers to the world economy in the year ahead. The danger worldwide is no longer inflation but deflation. The problem is that few people alive today—bankers, politicians and business men—have lived through and experienced deflation and know how to deal with it.
Asia is still in difficulties. Japan is, at best, bumping along the bottom and, at worst, heading for even more deflation. Europe's economy is weakening and unemployment is rising. The current world economy is being kept on the rails by the motor of the American economy. This situation cannot last indefinitely because of the growing United States trade deficit. The US cannot, and will not, be willing to be the importer of last resort for ever.
If there is a financial crisis in Brazil—all commentators accept that the Brazilian economy remains fragile—it could spill over into the rest of Latin America. If the American stock market were to fall sharply, it could cause a drop in consumer demand and the world economy would move quickly into recession and deflation unless the European Union was prepared to change its policy to


allow an increase in growth and open its markets. By announcing next year's tax reductions now, the Chancellor has become a hostage to fortune. I do not believe he has taken sufficient account of the dangers.
I turn now to a constituency matter: the burden on the motorist. I represent a rural constituency where people must use cars to travel to work and the shops and to take their children to school. Once again, the Government have used the injudicious commitment given by the Deputy Prime Minister at Kyoto as an excuse for another pernicious attack on the motorist. Fuel tax now constitutes 85 per cent. of the cost of the petrol that we buy—that is the highest percentage in the European Union. I do not know whether the Government are proud of the fact that, since Labour came to power, British tourists, for the first time in history, can fill their tanks more cheaply in Calais than in Dover.
This is an anti-motorist Government, and I am delighted that the Leader of the Opposition indicated in his response to the Budget a change in our policy. I have long advocated abandoning the concept of an automatic escalator for petrol tax. With my right hon. Friend's statement, we at last have a political party in this country that will fight for a fair deal for the motorist.
The policy has proved an absolute failure on conservation grounds. People have not given up their cars or used them substantially less. My constituents have no alternative: they must pay the tax with money taken from elsewhere in the family budget. The poorest motorists suffer the most, particularly the poor who live in the country. This tax also hits the family because many families' main pleasure is the family car: taking the family out for a day trip is often the highlight of the week.
The change in the vehicle tax does not help the family. The Chancellor clearly has no experience of such things. It is impossible to get two or three growing teenagers and all their luggage into a car of 1,000 or 1,100 cc. Has the Chancellor not heard of the family saloon? This tax hits the family and the countryside.
The Government are proud of their Budget policies for small business. Unlike most Labour Members, I have owned and operated medium-sized enterprises for the past 40 years. I have looked carefully at the Budget proposals, and I have discovered that 98 per cent. of small businesses will get very little. For those who receive something, the benefits will pale into insignificance compared with the cost of implementing the 2,000 additional regulations introduced by the Government through the social chapter, the working time directive, the "Fairness at Work" White Paper, the national minimum wage, the new hygiene regulations, the Sex Discrimination Act 1975 and the Race Relations Act 1976. The list goes on and on.
Most Labour Members have never run a fish and chip shop and they have no idea of the burden that such regulations impose on small businesses. It is not just the financial cost, but the enormous amount of management time that is devoted to such matters that should be spent on productive development of the business.
I shall give an example from my constituency. Mr. Simpson has been a butcher and his family have operated an abattoir for four generations. He spent £30,000 in order to comply with the hygiene regulations introduced by local authority environmental health officers. New regulations will now be imposed from 1 April. Mr. Simpson tells me that when he slaughters

for six hours on Monday—he slaughters once a week— three staff members are present as well as up to five members of the inspection staff, for whom he has to pay. Mr. Simpson will be forced to close his business from 1 April.
Labour Members have made much of the 1p cut in corporation tax for small business. A company that makes £50,000 a year will save £500. Apart from the cost of regulations, that sum will be more than gobbled up by the increase in the cost of petrol. For most businesses, motoring costs are a major expense. Most goods are delivered to customers by road, and sales representatives must have cars to do their jobs. The increase in the tax on DERV will be badly received by the haulage industry. As many of my right hon and hon Friends have said today, more and more hauliers are flagging out their trucks. While returning to my constituency by train last week, I spoke to a man who owns a haulage business in Wakefield, who told me that he had just sent 20 vehicles to be registered in Luxembourg.
The tax increases will also be a bitter blow to agriculture, which is important to my constituency and which is suffering badly at present.
The company car has also come in for another battering this year. The reduction of the rebate for high mileage and the abolition of the reduction for cars that are more than four years old mean that an owner could pay an extra £776 for a five-year-old car worth £19,000 that does about 10,000 miles a year. The changes will hit particularly badly sales representatives who work hard and do high mileage. That is most unfair, and represents another attack on middle England.
My right hon. and hon. Friends have talked about stealth taxes. I draw the attention of the House to the increase in tobacco duty. Hon. Members have probably forgotten that there was an increase on 1 January this year of 21p per packet. Less than three months later, there has been another increase of 17.5p. I do not smoke—I think it is a foul habit—but I think that that increase will simply encourage smugglers. Smuggling is no longer an amateur operation: it has been taken over by professional criminals. Many people are shifting from trafficking in hard drugs to trafficking in cigarettes. That is not the way to deal with the problem—it should be addressed by gradually reducing taxes.
The price of sparkling cider has increased by £1.02 a bottle. That will damage the British cider industry. What is the reason for the increase? The Government have given in to pressure from the Italian Government, who believe that cider competes unfairly with cheap Italian sparkling wine. If the Government wanted to deal with the problem, they should have reduced the duty on sparkling wine to the level of that on ordinary wine. There is no reason why we should pay a tax on bubbles as well as face increased cider prices.
This Budget is bad for middle England and destroys the Government's claim to be the party of the middle classes. Those on above-average pay will pay more national health insurance, as will the self-employed. Home owners will lose MIRAS and pay more stamp duty when they move house. Middle England's company car taxes have increased dramatically. The married couples allowance has been abolished, and private and corporate pensions have been attacked yet again. The penny will start to drop with middle England. The Budget, which is bad


for business, agriculture, the countryside, the motorist, the smoker and, above all, the hard-working married man who works long hours to provide a better standard of living for his wife and children, will in time prove to be bad for Labour.

8 pm

Mr. Gareth R. Thomas: I join other Labour Members in congratulating my right hon. Friend the Chancellor and his team on yet another excellent Budget. He impressively balanced the need for radical new measures to promote enterprise and the need to deliver additional support to those who need it most, while at the same time not putting at risk our hard-won economic stability. The 16,500 pensioners in my constituency will be particularly delighted by the £1 billion package of extra help for pensioners, especially the uprating by average earnings of the minimum income guarantee.
In Harrow, we are lucky to have high numbers of people in work and a high proportion of small businesses. The new l0p rate for income tax and the 1p cut in the basic rate, coupled with my right hon. Friend's measures to stimulate investment and growth in the small business sector—rewarding, as they do, hard work and entrepreneurial talent—will be extremely well received.
I want to concentrate my remarks on the Government's welcome commitment to the introduction of a business energy tax in April 2001. I never believed that environmental protection and economic growth were direct opposites. I also never had much confidence in the arguments and mindset of those on the right or the hard left of British politics, who seemed to believe that sustainable development and enterprise were at different ends of the policy spectrum. There is clearly a third way which marries environmental aims with economic goals. Economic instruments such as the business energy tax which stimulate effective business and market responses to the environmental challenges which we face are examples of sensible new Labour policies.
Over the past few weeks, Labour Members have had to endure much windy piffle-paffle from Conservative Members about the Government's attitude to Select Committees. The centrepiece of the Environmental Audit Committee's response to the last two pre-Budget reports has been to call for the implementation of a business energy tax. I congratulate the Government on their sensible response to those reports. Such a tax will be an important tool in meeting the targets that were set at Kyoto for reducing greenhouse gas emissions and will clearly encourage industry to conserve energy and switch to much cleaner forms of energy.
Crucially, the commitment to make the levy fiscally neutral will also protect business competitiveness. The notice that has been given and the consultation that my right hon. Friend the Chancellor has announced will give business time to plan and an opportunity to work with the Government to decide on the details of the levy.
As countries across the world consider how they will meet their climate change commitments, the introduction of a business energy tax is increasingly recognised as a useful and essential tool. Six European countries have already introduced an energy or carbon tax since 1990, and Germany and Italy are working on similar proposals.
In the middle of the next decade, carbon emissions are projected to start increasing again in the UK. According to the projections of the climate change consultation paper, the proportion of the six Kyoto greenhouse gases accounted for by CO2 will rise from 78 per cent. in 1990 to 84 per cent. by 2010. As my right hon. Friend the Chancellor made clear yesterday in his statement, we are locked in, rightly, to a legally binding target of a 12.5 per cent. reduction in our carbon dioxide emissions.
Labour Members recognised a long time ago the necessity of reducing carbon dioxide emissions—hence our manifesto commitment to reduce them by 20 per cent. That is an ambitious goal, and it is a recognition not only of the present Kyoto targets, but, more importantly, of the stringent requirements that are likely to follow the first round of the agreement.
Industry produces 40 per cent. of those carbon emissions in the UK and will, along with other sectors, have to make a significant contribution towards meeting climate change targets. A signal needed to be given to the whole of industry that energy efficiency and the use of renewable energy supplies had to be a priority in its future investment decisions.
In an ideal world, I would have preferred the tax to be levied according to carbon content, rather than pure energy usage, but I recognise the difficulties that would arise in trying to calculate accurately the carbon content of electricity, as well as the inevitable complexity and resulting uncertainty that it would introduce.
I welcome the comment in the consultation document that my right hon. Friend the Chancellor will keep under review the possible exemption of energy supply from small-scale renewable generators, albeit if pool reform allows. Studies cited by Lord Marshall's report demonstrate that energy taxes effectively produce cuts in emissions. The Swedish environmental protection agency has estimated that the introduction of its carbon tax has reduced emissions by 2 per cent. My right hon. Friend the Chancellor estimated that the levy alone would save about 1.5 million tonnes of carbon a year by 2010. That, together with the other measures that he announced, would achieve an overall reduction of 3 million tonnes of carbon, which is equal to about 2 per cent. of Britain's emissions. That would be a significant contribution to our climate change targets.
There is no reason per se why a business energy tax should hurt Britain's competitiveness. I have already referred to the fact that many of our European neighbours are implementing or considering proposals for an energy tax. That tax will not place Britain at a competitive disadvantage with our major trading partners.
I welcome my right hon. Friend's announcement that the revenues from the levy will be recycled back to business through the national insurance system, ensuring that there is no increase in the overall tax burden for business. That clearly demarcates the tax as one for environmental purposes and ensures that it will be judged on that basis.
The announcement that energy-intensive industries can seek voluntary agreements to reduce their levy in return for undertaking energy-efficient measures is clearly sensible. The energy tax in Denmark works in a similar fashion to protect the competitiveness of its energy-intensive industries, and has lower tax rates for companies in those sectors that agree to invest in


energy-efficient measures. That is in line with the aims of our levy to reduce emissions by focusing on changing industry behaviour, not loading extra costs on business or raising revenue for the Treasury.
Research quoted in Lord Marshall's report found considerable scope for cost-effective energy-saving measures in all sectors, including those identified as energy intensive. Another important feature of the Danish energy tax is the strong support given to small businesses to improve their energy efficiency. The CBI has rightly argued that if a business energy tax were to be introduced, it should include support for small businesses to adopt energy-saving technologies through the provision of information and advice. Clearly, the welcome £50 million investment fund will provide some support, and it will help to promote an expansion in renewable energy.
The exemption for renewable energy where it is supplied direct to the consumer is also sensible and welcome, and reflects the environmental benefits that accrue from renewable power sources, which are not currently recognised in their prices.
A significant increase in the supply of energy from renewable sources is important in the interests of a long-term, secure, diverse and low-emission energy supply in the UK. In that context, I look forward to the renewables review due to be published by the Department of Trade and Industry shortly.
Under the previous Administration, we had the worst record in Europe for exploiting renewable energy sources. Eurostat figures reveal that, in 1995, the renewable share of inland energy consumption was 0.7 per cent. in the UK, compared with 25 per cent. in Sweden, 24 per cent. in Austria, and a European Union average of 5.3 per cent. I therefore particularly welcome the Chancellor's commitment to examine whether further incentives could be given to promote the take-up of renewable sources of energy by utilising part of the revenues from the business energy levy. Other European countries have implemented various means of supporting renewables which have resulted in a much larger share of the energy market for that sector. Capital credits on the purchase and installation of new renewables equipment to overcome the barriers of high initial costs have been utilised in Belgium and Finland.
Another model that has been suggested is the Dutch system of tax relief for green investment funds. Banks managing the funds in the Netherlands are able to offer good rates of interest to green projects that would not otherwise have been financed, while still providing a reasonable rate of return to investors. So far, £1 billion of private sector finance has been levered into those green funds.
My right hon. Friend has delivered undoubtedly the greenest Budget that we have seen. It builds on the lead that Britain gave at Kyoto and will continue to ensure Britain's place at the forefront of the drive to reduce greenhouse gas emissions. I warmly welcome it.

Mr. John Swinney: The hon. Member for Lincoln (Gillian Merron) commented earlier that newspaper headlines had been broadly favourable to the Budget. Of course that must be conceded—the Government have had a great day in the press. However, one press headline might not have cheered up one of the

households in Downing street, because it stated that "The future's Brown". That might have gone down well at No. 11, but I suspect that it would not be the centre of attention at No. 10.
I welcome some of the measures in the Chancellor's Budget, especially the adoption of the l0p starting rate of taxation, a measure which clearly supports the position of low-income households.
The moves on pensioners, particularly the winter payment of £100 and the Chancellor's guarantee yesterday that that would be sustained throughout the term of this Parliament, are welcome, but I urge the Chancellor to ensure that that is protected against inflation.
The more direct and targeted support for children is equally welcome and shows a willingness by the Government to tackle direct support in the most effective way.
The measures on lower corporation tax, to which I shall return, are also welcome. The Government expressed scepticism when the argument for lower corporation tax was advanced by my party before the election. Their change of heart is welcome.
The Chancellor's growth assumptions have been the subject of debate today, and I join in the scepticism about them. The sweep of independent forecasters believe that the 1999 forecast adopted by the Chancellor is broadly double the mainstream position. The forecasts for the year 2000 settle at about half a per cent. lower than that made by the Chancellor. It is stretching credibility to assume that there will be such a lively bounce-back from the close proximity of recession as the Chancellor implies by his growth assumptions.
As we survey various economic information relating to the volume of job losses that have taken place in Scotland since the general election—there have been 14,000 job losses since May 1997, and only yesterday further job losses were announced in manufacturing in Scotland—the Red Book commentary on the position of the manufacturing sector and the downturn in manufacturing output illustrates the severity of the problem.
The Chancellor's growth assumptions are not just a point of academic interest—they are fundamental to the plans that he has announced. At column 175 of Hansard yesterday, the Chancellor gave an assurance that the delivery of the £40 billion of public expenditure envisaged in the comprehensive spending review was safe within the fiscal rules and assured as a result of the assumptions that underpinned the Budget. A great deal hangs on the Chancellor's ability to deliver those growth assumptions, especially in relation to valuable public expenditure programmes.
I am concerned about the fiscal and monetary balance that has been struck by the Chancellor in the Budget. The delivery of further fiscal loosening is clearly part of his judgment, but I fear that that may jeopardise the ability of the Monetary Policy Committee to deliver further interest rate cuts that will take our level to one comparable with European short-term interest rates, which are such an important factor in the competitive position of British companies. If that disparity continues, it will create a competitive disadvantage for our companies. Some of the beneficial business measures that the Chancellor announced yesterday will be undermined by this fiscal stance.
On the proposals for enterprise, I welcome the cuts in corporation tax, as I said. We should learn from some of our European counterparts that, by lowering the rates of corporation tax, we can expand the yield of tax generated to the economy.
I welcome the measures on small and medium enterprises, but I caution that new initiatives should not be allowed to clutter the existing SME support initiatives. Additional bureaucracy should not prevent resources from reaching front-line companies that could benefit from the new services.
Let me comment briefly on particular industries. In the Chancellor's statement yesterday, there was cursory reference to the whisky industry, which is fundamental to the economy of parts of Scotland. The £2.54 billion a year trade in the whisky sector underpins 12,5000 direct jobs in Scotland and 50,000 indirect jobs.
Hon. Members have commented extensively on the importance of spin doctors in the presentation of the Government's Budget programme. One of the national newspapers in Scotland ran a front-page story on Tuesday, speculating with a high degree of certainty that there was to be a 4 per cent. cut in the duty on whisky, and suggesting that that was due to intensive lobbying by the Secretary of State for Scotland.
That cut did not materialise. Whisky is still the most heavily taxed spirit in this country. Is it any wonder that sales of that important commodity are depressed? There was a 7 per cent. fall in sales in the UK last year, and declining revenues as a result of the depressed sales. In 1991–92, more than £1.7 billion in tax revenues were generated from sales of whisky, but, last year, the comparable figure was £1.5 billion. The opportunity to solve some of the problems in that sector have been missed in the Budget.
The other sector on which I shall comment is road haulage and the more general issue of fuel duty. I thought that the hon. Member for Ochil (Mr. O'Neill) was about to get himself into serious trouble with some of his remarks about road hauliers, but he saved himself. Road fuel duty is becoming an enormous problem to the economic health not just of rural and county constituencies, such as the one that I represent, but more widely across the economy.
I refer to comments made by Mrs. Pat Grant, the managing director of Norfrost Ltd., an important manufacturing company in the north of Scotland. The company manufacturers what used to be called white goods—refrigerators—at its factory at Thurso in the north of Scotland, and transports them for distribution throughout the world. Mrs. Grant estimates that the last increase in the fuel duty escalator put her company's costs up by £100,000. It is a large company which employs many people. The increase in fuel prices is becoming a serious issue in the manufacturing sector in Scotland. Mrs. Grant reckons that the fuel duty escalator is as big a competitive impediment to her business as the overvalued pound.
The compensatory measures from the rural transport fund announced by the Government—a 20 per cent. increase—do not address the problem for rural areas. In my constituency, a large rural part of Scotland, three rural

petrol stations have been defined as being capable of benefiting from additional support from the rural transport fund, but one of them has already closed. What help is that to car users in the rural areas of Scotland? The Government must think carefully about future initiatives in the sector. We will oppose them on Monday night on that issue.
The Chancellor boasted in his Budget statement that he had delivered a public expenditure position that was £2 billion lower than the spending plans that he inherited. No wonder. The Government have confirmed that £211 million has been cut from Scottish education in the past two years. I can see no new money for public services in the Budget. If the Chancellor had £2 billion for tax cuts in the future, the public would have expected that to be directed towards public services. Even under the Government's current plans in Scotland, public expenditure will not recover to its level under the Conservative Government in 1994–95. The expectations of the Scottish people will be diminished by the Budget.

Ms Claire Ward: I, too, congratulate my right hon. Friend the Chancellor on an outstanding Budget, which will, without any doubt, introduce many measures that will benefit my constituents. That is in stark contrast to what we had from the previous Government. A Conservative Member referred earlier to some strange golden legacy. I do not remember a golden legacy when the Labour party came into office. Our only legacy was one of poor investment in public services, poor standards in education because of a lack of investment, poor investment in our infrastructure, including our rail services, and a crumbling national health service. This Government have invested far more money in our public services than the previous Government could ever have dreamed about.
I returned to my constituency today to meet some pensioners who were celebrating an exhibition on memories with local students at West Herts college. I asked those pensioners for their views on the Budget. It was summed up for me by one pensioner who said, "There is something there for everyone and a bit more for those who need it most." That is exactly what the Budget is about.
We can judge our society by how we treat our pensioners, who deserve the very best that the country can offer them after they have committed so much of their life and effort to it. We have shown a clear intention to deliver the best for pensioners. The £20 a year winter fuel allowance has been increased to £100, The pensioners to whom I spoke today recognised that as a major asset. It is difficult for them to decide how to share their small income between heating, food and other necessities. That is clearly a welcome measure for pensioners in Watford.
Nearly 16,000 pensioners will benefit from the other measures introduced in the Budget. The minimum income guarantee will ensure that, through the income support system, a single pensioner will have a minimum income of £78 a week. While many of us with mortgages have seen the reduction in interest as a real blessing, many of my pensioner constituents have regretted them, because they rely on the interest from their savings. This is a section of society who need that little bit more income at a time when they deserve to live their lives in some dignity. Therefore, I welcome the introduction of pensioner bonds to provide better value for pensioners.
This is also a Budget for families, and I welcome the change in the married couples allowance, not because I am anti-marriage or in any way want to penalise those who are married, but because we have rightly given priority to families with children. We have decided that the most important thing is to give the best start to children in all families. By introducing a taper to the children's tax credit, my right hon. Friend has recognised that there are families who do not need that money and that the benefit should not be paid in full to higher tax payers.
The Budget will, without a doubt, reward work and make work pay. Far too often, those on benefits and seeking work have lost out on getting into work. There have been many disincentives to work. The Government aim to make work pay, and the Budget does that, along with all the measures that will be introduced within the next couple of years, including the minimum wage, which will be introduced this year, and the working families tax credit. The l0p rate of income tax will help those on low incomes most of all. Although Watford will be considered a southern town in comparison with other parts of the country that have problems, we still, unfortunately, have areas of low income and low pay. That measure will be an added boost to those families and individuals.
Lone parents will benefit from the Budget. Many have found a disincentive in moving from benefits into work. The extension of benefits for an additional two weeks will give extra security to those who wish to work but might otherwise have felt that they would lose out disproportionately by doing so. That, together with the increase in child benefit and the Government's child care strategy, will make it much easier for lone parents in my constituency to secure work that will pay in the long term.
My right hon. Friend's reluctance to increase duties on alcohol must be welcomed by those of us who like to indulge now and again. I also welcome the reduction in the duty on pools companies. The headquarters of the Ladbroke group is in my constituency and, on its behalf, I welcome such changes. I also welcome my right hon. Friend's decision not to increase duties on alcohol because, although no brewing now takes place in Watford, there are many brewing industries in the town.
I am also pleased that today, which is national no smoking day, the Government can confidently say that they are not encouraging smoking, and are doing everything in their power to reduce the amount of smoking that takes place by increasing the duty on cigarettes. As someone who does not smoke, and who does not wish to have smoke blown all over me wherever I may be, I am pleased that the Government have taken this step.

Mrs. Jacqui Lait: Will the hon. Lady give way?

Ms Ward: I shall not give way because of the 10-minute limit on speeches.
This is a positive Budget for all my constituents and for businesses that will gain from the tax changes and from the incentives to encourage employees by means of the new grant for information technology. There is no doubt that information technology and education are the way forward for Britain, not low incomes and poverty pay. The Government have recognised that as a priority.
The additional £2,000 per school for books will also show that the Government are serious about making education a priority, together with the additional funding for education and the health service.
I welcome the Budget on behalf of my constituents of Watford.

Mr. Tony Baldry: The Budget is a crucial time because there is nothing more fundamental in the state than what the state takes and what the state returns and redistributes. Therefore, it is important for democracy and good governance that what happens in the Budget is reasonably transparent. This Budget is deliberately opaque. Its opaqueness is such that, the day after the Budget, the Prime Minister and my right hon. Friend the Leader of the Opposition are still involved in a lengthy wrangle about whether the burden of taxes has increased or decreased. That must be a matter of fact that could be resolved fairly easily.
Those who turned on BBC Radio 4 news this morning at the first opportunity—6 o'clock—would have heard the commentator on the business news confirm that, so far as the BBC is concerned, taxes are going up and will go up substantially each year for the next four years as a consequence of the Budget. That view is clearly confirmed by the House of Commons Library, but the fact that it is still a matter of dispute is a reflection not only on the Government, who persist in putting up taxes, but on the way in which the Budget has been presented. Different tax years have been confused, some measures that have been introduced will not be implemented for two years and we have had to try to compare the various figures, so it is not surprising that there has been a fair degree of confusion.
The Government are somewhat embarrassed by all that, because the Prime Minister said before the general election that the Labour party had no plans to increase tax at all. However, only last week he had to acknowledge that the tax burden will increase over this Parliament. The tax burden has already increased substantially during this Parliament—Labour's first two Budgets increased taxes by more than £40 billion. This Budget includes a substantial number of new taxes, the impact of which upon individuals, couples and families is not immediately obvious. Mortgage interest relief has been scrapped, the married couples' allowance has been abolished, company car taxes and stamp duty have gone up and petrol tax has gone up yet again.
In a number of ways, the delivery of the Budget was intended to obfuscate. For example, yesterday, the Chancellor made much to all of us in the Chamber of the fact that the bottom rate of income tax will be lowered to l0p, but there was no mention at all of the scrapping of the 20 per cent. band. People earning the maximum allowed at the basic rate of income tax will pay slightly more tax next year, despite the introduction of the 10 per cent. band. They will pay up to £141 extra tax because the 10p rate will apply only to the first £1,500 earned in excess of personal allowances. The 23 per cent. basic rate of income tax will be extended to cover earnings between £1,501 and £28,000.
At first sight, those measures looked like good news for those on lower pay, but the Chancellor forgot to tell us that he was scrapping the 20 per cent. band. When one


looks at the facts, they are somewhat different from the spin. The 10 per cent. rate was trumpeted as the centrepiece of the entire speech, but the ending of the 20 per cent. rate went unannounced. It was simply abolished by omission—glided over as if it had never been.
Although attention is intended to be drawn to the 10 per cent. bottom rate of tax, no adequate attention was given to the fact that the upper earnings limit on national insurance will rise by more than 18 per cent., thus cutting take-home pay over the next two years. For most people there is little difference, whether in respect of tax or national insurance contributions, and many people will see more of their pay absorbed by national insurance contributions.
The Chancellor hailed the introduction of the children's tax credit as a reasonable quid pro quo for scrapping the married couples' allowance in April 2000, but the children's tax credit will not be introduced until 2001. That is a further example of the Chancellor confusing different years and seeking to give the impression that he is being generous, but all the figures show that the position is somewhat different and millions of households—couples with children, couples with a mortgage—will suffer a loss.
Pages and pages of the Budget were devoted to various schemes intended to help business, but many are so complex that an aspirant entrepreneur will find himself surrounded by eager officials from the new Small Business Service and accountants explaining the joys of tax breaks for investment and for research and development. There is also the offer of computers from the capital modernisation fund, but businesses in my constituency in north Oxfordshire want to be left alone by the Government and a substantial reduction in regulation.
I am prepared to lay a wager with Ministers on the Treasury Bench that an independent poll taken a year from now in a patch such as my constituency would show that very few businesses had contacted the Small Business Service or had been able to take advantage of any of the specific measures in the Budget.
Those businesses are really concerned about the general burdens on manufacturing industry and the manufacturing base and what they see as an ever-increasing army of health and safety officials, building regulations inspectors and VAT men who are only doing their job. They are concerned about the working time directive and all the new burdens on business that the Government have introduced from unnecessary European Union directives.
The self-employed are concerned about the substantial increases in their national insurance contributions, which were not properly highlighted by the Chancellor. Many businesses are set up by people who start off as self-employed, so that measure is a real disincentive to them.
It will be interesting to see which, if any, of the various specific measures announced for business come to fruition. Good window dressing and good headlines on Budget day made an impact, but, six or nine months down the line, few of those measures will have made much impact for British business.
The measures in the Budget are intended as spin. The various programmes on enterprise took up seven pages of the Chancellor's speech, but the announcement that he was ditching mortgage interest relief at source took only seven lines. He will give a little more than £290 million through the programmes referred to in those seven pages, but he will take away £1.4 billion by scrapping MIRAS.
Ministers must accept that, although at first sight this looks like a giveaway Budget, it is in fact very complicated. Business people and those involved in enterprise cannot be motivated if they cannot see incentives. I predict that those who will benefit more than anyone else will be chartered accountants: they will have a field day as a result of a Budget which, when it is analysed in years to come, will be seen not as a giveaway but as a Budget which continued to hike up taxes and tried to hide that with spin and obfuscation. It would have been so much better if the Government had sought to cut taxes—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman's time is up.

Mr. Geraint Davies: What a great Budget! It was not red nose day for the Opposition; it was red face day. We had a fantastic media reception, involving winners and more winners: pensioners, businesses and families. It has been reported that even Stella Hague, the Leader of the Opposition's mother, thought that this was a great Budget.
Nevertheless, it is important to take a strategic view of the impact of the Budget on UK plc, as we move forward in the global economy during difficult times. The Budget will create a fairer, stronger Britain for the future. We should look at the big picture, rather than making puerile jokes about Roger the dodger. No doubt Stella was not very impressed by that. Anyway, we should consider the broader impact on the British economy.
I think that we all welcome the lower tax rates: the reduction from 23p to 22p, the l0p tax band and the cash for families. Some 16,800 families in my constituency will benefit from that. We also welcome the stimulus for enterprise, the support for pensioners and the recommitment to health and education in the form of £40 billion. There is also extra money for accident and emergency services, and £2,000 for each school.
All that is welcome, but I heard some scepticism from Opposition Members. Where was the money to come from? In fact, this is the stability dividend from the drawing of a line under the period of boom-and-bust chaos created by the last Government. The reality is that we inherited a debt cost of some £28 billion a year—debts which have now been transformed into budget surpluses. The reality is that, since the new Labour Government took power, nearly half a million more people are now in jobs—no longer claiming benefits, but creating economic wealth. The reality is that long-term interest rates are lower than they have been for 40 years, and that short-term interest rates have fallen seven times in succession. For that reason, we are spending less on social security than was anticipated.
The current position contrasts with the vivid picture painted by the right hon. Member for Wokingham (Mr. Redwood), who seemed to be describing another


world—a world to which, presumably, he has now gone. The right hon. Gentleman conjured up a picture of escalating unemployment; as I have said, nearly half a million more people are now employed. He talked of recession—and, of course, there is a recession in wider terms. A quarter of the world is in recession. Global forecasts have been halved, and difficult times lie ahead; but we must face those times realistically.
That does not mean a repeal of the independence of the Bank of England, which the right hon. Gentleman seemed to be calling for and which would cause interest rates to hurtle up. It does not mean rejecting, in perpetuity, entry into the euro, which would drive away all international investment. Conservative Members keep badgering us about the need for sterling to go down. Sterling will go down only if the City and the international markets lose confidence in it, and that will happen only if those markets have confidence in the Conservative party's ever regaining power and, as a consequence, preventing Britain from joining the euro—and the reality is that no one thinks that will happen.
Earlier this week, the Financial Times reported the International Monetary Fund as describing Britain as a glowing example to the world. One of our key objectives is to make work pay by guaranteeing an income of £10,000 for every working family in Britain, and—as we shall do through this Budget—lifting an extra 7,000 children out of poverty. Family support, in terms of income, is crucial to a Government whose priority is education, education, education: a Government who see that as the key to the liberation of our children, enabling them to be productive in a new economy and a new world.
In the world of Tory poverty, children in millions of households went to school with low self-esteem, low nourishment and low prospects. That sounded the death knell of Britain's economy, but we have turned the situation around.
I welcome the structural tax changes that will eliminate some of the distortions that we have inherited—distortions that were not tackled during the 18 solemn years of Tory rule. The move on mortgage interest relief at source is particularly brave. MIRAS is a distortion of the housing market which causes normal people to invest enormous amounts in housing rather than in British industry. It has also made the UK economy too sensitive to interest rates. We want to consider the prospect of joining the euro; we do not want interest rates to be set on a pan-European basis, and then to find that there is a particular sensitivity in the UK economy. That prospect has been eliminated. Moneys have been recycled more fairly and effectively, supporting enterprise and families.
I welcome the alignment of national insurance and tax, which goes hand in hand with the transfer of responsibilities for national insurance to the Inland Revenue. That is good for business, for the markets and for Britain. I also welcome the new tapering of business taxation. Corporation tax is at 30 per cent., an all-time low, the tax for small and medium enterprises is at 20 per cent. and the tax for companies that are starting up is just 10 per cent. The Budget is creating a ratchet for the generation of a new enterprise culture in Britain of prosperity and employment.
The support for SMEs will encourage rational risk taking. Lower capital gains tax, regional research and development tax credits and university cash for science and innovation are all to be independently welcomed.
For a new Government, their approach on environmental sustainability is forward looking and brave. They have taken the opportunity with both hands. The tax on fuel, the investment in transport, which is yet to be announced, the neutral system of business energy tax, combined with reductions in national insurance, the attack on company cars—it is about time that we did something about them— and supporting company schemes that provide communal transport for employees, are all to be welcomed.
We are creating a virtuous investment environment in Britain which is based on low tax, high skills, an open economy, market access to Europe, stability and an end of boom and bust. The fact that it is an environment in which English is spoken will be well received by the north Americans, the Japanese and others. There will be opportunities for more and more investment in a new Britain and new world.
The Budget has been good for families, the elderly, small business and the environment. Well done Gordon for making Britain great again.

Mrs. Angela Browning: I shall concentrate on matters in the Budget that particularly affect my constituency. I begin with a point that I raised with the Prime Minister this afternoon at Question Time, although I did not, of course, get a satisfactory reply.
In my constituency, which forms a large chunk of rural Devon, 80.4 per cent. of householders have cars. Those cars are necessary to their everyday lives. Users are of all ages. If they did not have access to a car, many elderly people in rural areas would have to move out of the villages and their homes elsewhere, and move into towns and cities. It is mobility, and the flexibility of that mobility, that make the car so important, yet today, those people face paying £3.13 for a gallon of unleaded petrol.
The Prime Minister seemed to indicate to the House this afternoon that, because of some of the pluses in the Budget, it did not matter that cars are being taxed at that level, but, in rural areas, there is a distorted effect. People living in rural areas will not enjoy any benefit that the Budget has given them in any other measure because they will need to spend the extra money keeping their car on the road.
The Government have increased the fuel tax escalator to 6 per cent. The tax has kicked in in three Budgets in two years; it has rocketed up since the 1997 general election. I was pleased to hear my hon. Friend the Member for East Yorkshire (Mr. Townend) say how the Conservatives would not only oppose but vote against the measure, which has been of great concern to me over many years, particularly on my constituents' behalf.
If the Government and the Prime Minister in particular are not willing to listen to Conservative Members about how unfair the measure is to people living in rural areas, perhaps he will look at the Hansard of yesterday's debate on the Budget, when his former Chief Whip, the right hon. Member for Bishop Auckland (Mr. Foster), said that he would be torn to pieces by his mainly rural constituents because of the imposition of that tax on petrol. It does discriminate against those who live and work in rural areas.
Many of those car drivers are also self-employed people. In rural areas, starting up small businesses is very important. People have a choice in rural areas: they either


start a small business or they go and work somewhere, very often somewhere quite a long way away. Encouraging entrepreneurs in rural areas is therefore extremely important. However, those people are being hit not only by additional petrol costs but by the increase in class 4 national insurance contributions, which will affect 500,000 self-employed people.
We have heard much today, particularly from the Secretary of State for Trade and Industry, on large businesses' support for the Budget. However, the response from small businesses has not been so favourable. I should like to quote two responses that we have received today.
The first is from Brian Prime, chairman of the policy unit of the Federation of Small Business, who estimates that increased class 4 national insurance contributions— from 6 to 7 per cent.—will hurt not only those additional self-employed people but
The real entrepreneurs and risk takers—the sole traders will miss out on the corporation tax changes, but will be hit by increases to national insurance contribution.
The Federation of Small Business said that the Budget has
completely missed the target where the majority of small firms were concerned".
Again we heard the Government praying in aid the support of the Confederation of British Industry and big businesses. However, as Conservative Members know, if one is really serious about developing entrepreneurial skills across the United Kingdom, whether in rural areas or in towns, one realises that it is small businesses—the genuine entrepreneurs—who create wealth and growth. They are the people who, in the main, create the jobs. The Government should take seriously the fact that the Budget has hit that sector.
It would be wrong for me not to take this opportunity to talk about another sector, which includes many small businesses, which I know have made representations to the Government prior to the Budget: the road haulage industry. In his speech today, the hon. Member for Ochil (Mr. O'Neill), quite astonishingly, described road hauliers as whingers, which I am sure will not go down well with his own hauliers—I imagine road hauliers live in most constituencies.
In my rural constituency, in Devon, I have many road hauliers. I have also received a whole bundle of letters from such hauliers who are small businesses, many of which were established by owner operators, employing up to 12 or 20 people. They are very important employers in my constituency, but are now fearful—as they were before the Budget—about the very future of their businesses. The Government ignored the representations that they received in a document that was sent, before the Budget—it was also sent to hon. Members—from the Freight Transport Association and the Road Haulage Association.
Hon. Members are aware of the issues that the associations raised in their representations to the Government, and the urgency with which they wanted the Government to deal with their problems in the Budget. However, their concerns have not only been ignored by the Government, but been exacerbated in the Budget because of the increased tax on diesel.
Therefore, not only will we lose individual small businesses, but there will be a sea-change in how the industry operates. I believe that the change—the way in

which businesses are so-called "flagging out"—will gather momentum, with businesses establishing themselves across the channel rather than operating in the United Kingdom.
I pay tribute to my hon. Friend the Member for North Shropshire (Mr. Paterson), who is in the Chamber, for raising the issue on the Floor of the House in a previous debate, in the hope that, prior to the Budget, the Government would listen not only to the industry but to representations from hon. Members on both sides the House.
It was with absolute dismay that I read the information provided today by the Road Haulage Association, after it had analysed the Budget's impact on the haulage industry. I beg the indulgence of the House to read it out. The increase will affect all my haulage companies. It says:
Britain's hauliers reacted with 'anger and disbelief, to today's announcement by the Chancellor that Duty on Diesel Fuel is to be raised by more than 11 per cent.
According to the Road Haulage Association, the rise will add more than £20,000 to the annual fuel bill of an average haulier"—
fuel costs in the industry often represent about 36 per cent. of business costs, so this is a huge increase on a section of their costs—
(vehicle fleet of 10 40te gvw artics), pushing their total average fuel bill beyond £200,000 for the very first time. The hike means that since the new Government came to power in 1997, fuel costs for the average haulier have increased by more than £50,000.
Hauling goods around the country is important, but nowhere more so than in the south-west peninsula. In Devon and Cornwall, we have to haul goods further because of the topography of the region. We are trying to encourage new investment and to persuade new companies to establish themselves there. The cost of hauling goods once they are manufactured is critical to the decision on where in the country to locate. The increase in diesel duty has not only put a block on investment but jeopardised the companies that already exist in my constituency.
Commenting on the increases, the director of the Road Haulage Association said today:
The reaction of my members to this increase will be one of anger and disbelief. Despite strong joint representations…the Chancellor has just rung the death knell for over 53,000 jobs in the UK haulage industry. It is particularly bad for hauliers who are competing against unfair competition from abroad. Increasing numbers of my members are asking how they can get out from under this Government"—
by flagging out. The flagging out package will enable them to avoid the United Kingdom's very much higher vehicle excise duty, as well as giving them access to cheap foreign fuel. Many hauliers are simply awaiting the outcome of the Government's review of vehicle excise duty before making that decision, but—

Mr. Deputy Speaker: Order. I call Mr. Richard Page.

Mr. Richard Page: I start by apologising to the House for inadvertently making a misleading statement last Monday week. I was standing in this very spot, and I said to the House:
I rather like Budgets, because they are just about the only Government announcements that are made to the House before they are made to the media."—[Official Report, 1 March 1999; Vol. 326, c. 834.]


An hon. Friend of mine said, "Just wait and see." I have to say that my hon. Friend was right and I was wrong. I got it wrong because the headline-grabbing measures announced by the Chancellor yesterday—the decision to abolish MIRAS and the married couples tax allowance, the increase in child benefit, the creation of partnership shares and the l0p starting rate for income tax—were all trailed in the weekend press.
The Observer had the proposals for a minimum guaranteed weekly income for the over-50s. The Sunday Telegraph had the tax break for research and development plus cuts in corporation tax for small firms. I can cite many further examples, but the basic point is clear. Before coming to the House, the Government leaked the details of the Budget on a selective basis so that each newspaper could have its mini-exclusive. It shows the Government's hypocrisy that, a couple of weeks ago, the Home Secretary went to the courts as a "matter of principle" to prevent the press leaking details of a report submitted to it before it was submitted to the House. Yet, when we have the Treasury leaking like a sieve about the Budget, even without the support of Charlie Whelan, we hear nothing about that principle, as it would compromise Labour's manipulation of the media. Spin today is, indeed, everything.
I genuinely congratulate the Chancellor on his performance. It was a superb presentation. I take nothing away from him. If I were an ice-skating judge, I would give him 5.9 out of six for performance.
However, the marks for content would be considerably lower. I have been in the House long enough to know that the mood created by a Budget, with much waving of Order Papers from the Government side on a Tuesday, more often than not turns decidedly sour in the weeks that follow. In that one hour, five minutes and 40 seconds—I am told that that was the Chancellor's presentation time— we heard nothing but a flood of facts, figures, details and projections. Not a single financial stone was untouched.
I thank the Chancellor for his consistent praise for the previous Conservative Government. He again made much of the present strength of the economy, speaking about the deficits reducing and, in the same breath, repeating Labour's manifesto commitment, saying:
We said in our manifesto we would work within the existing spending plans for our first two years
That means working within the figures of the previous Conservative Government.
We have seen the success that has flowed from that, because the Government inherited a golden legacy. However, the two years are up and the Government are starting to fly blind. For me and many in the media, a sober analysis of the Budget shows that millions of taxpayers will be out of pocket within two years, particularly thanks to the changes to the upper earnings limit for national insurance, which The Daily Telegraph has described as the "forgotten tax". It will rise by 18 per cent., cutting take-home pay over the next two years. The measure will be particularly damaging for constituencies with a profile similar to that of South-West Hertfordshire.
The Government have started to gamble and they have got themselves into a box because of their actions in their first Budget. I admit that there was a potential for an increase in inflation. I understand that they were reluctant to use their powers to reduce consumer expenditure. Instead, through interest rate hikes and bashing industry

at the start, they have ensured that our exports have been hit by a high pound. The recent reductions in interest rates have merely been following world figures. The effect of our strong pound continues to damage our industry, in addition to the extra taxes that the president of the CBI has eloquently referred to. If rates are reduced further, the price of British goods might become more attractive, but inflation would become a threat. If it is held, unemployment looks set to rise.
That is what the Government are planning. The National Audit Office today endorsed the predictions of several financial bodies that a further 400,000 will become unemployed over the next two years. With falling output, the Secretary of State's call for increased efficiency will result in an increase in unemployment.
Of the measures in the Budget, particularly those affecting small businesses, I support the continuation of the 40 per cent. write-off allowance against investment for small business. The idea was blocked by the previous Government, but I have always supported it. I have made my views clear several times. However, it is not extra money, but merely a continuation of the allowance. I would like a higher percentage that was more closely focused on the means of production rather than being spread all over. In other countries, particularly Japan, the idea has been used as a specific generator.
I welcome the l0p starting rate for tax on profit for small business, but, again, I must record my admiration for the Chancellor's careful choice of words. He said:
Every company making a profit of up to £50,000 will benefit.
On closer examination, that 10 per cent. applies only to the first £10,000, after which a taper comes in. For a company earning £50,000 profit, the measure will be tax neutral.
I am slightly concerned about the various arrangements to help small business. The Chancellor referred to the
one-stop open-door service…to offer loan guarantees, to support innovation, to advise on electronic commerce and deliver, for the first time, an automated payroll service".—[Official Report, 9 March 1999; Vol. 327, c. 175–79.]
I wonder whether that will cause confusion, because I understood that business links was the one-stop shop. I do not know whether the new service will be through business links, or separate from it.
I am sorry that the Budget contained no mention of the threat that the country will face from the amount of business that will be done through the internet, where the collection of tax will become so much more difficult. In horse-race betting, for example, people who bet abroad through the internet completely avoid paying any tax. That trend will spread through sectors of the service economy.
Behind the Budget are a large number of narrow, targeted measures, and the Budget must appeal to as wide a range of interest groups as possible. Everyone is in favour of the general economy and particular expenditure that Sir Anthony Eden talked about in the 1950s. George Bernard Shaw said that Governments who rob Peter to pay Paul can always rely upon the support of Paul. The trouble with this Budget is that it is built on that foundation, and you cannot fool all the people all the time.

Mr. Owen Paterson: The background to the debate is that there are three levels of taxation in the world. One, in the United States, has created 13 million jobs in the past six years. Here in the UK, we have created 2.5 million jobs. In the euro zone, there has been a net loss of 699,000 jobs.
The Budget shows that we are on the cusp of moving away from a free-enterprise, low-tax economy towards a higher-tax economy. It was breathtaking for the Prime Minister to state today that the Budget would lower tax. The Government came into power with the level of tax at 38.1 per cent. of GDP. Page 154 of the Red Book clearly states that that will go up to 39.7 per cent., as projected for 2003–04. The level of tax was £315 billion in 1997; it is projected to be £425 billion in 2003–04.
Another lesson from the United States is that we should have fewer regulations and less intervention in business. The huge growth in jobs in America is because of micro-businesses. Businesses with a turnover of less than $500,000 are exempt from the minimum wage and all sorts of discriminatory legislation. In contrast, since the Government came to power, there have been 2,000 new directives. Ian Fletcher, of the British Chambers of Commerce, has calculated that they will cost £500 million to set up and £500 million a year to administer.
There are signs in the Red Book that the cost of the Budget will be in increased unemployment. In the west midlands, unemployment is nudging up from 4.6 to 4.9 per cent. In my two boroughs, it is rising from 4.1 to 4.5 per cent., and from 2.5 to 2.8 per cent. Regrettably, the Red Book states that social security benefits will march away. In 1998–98, the figure will be £93.5 billion, rising to a projected £106.4 billion in 2001–02.
In my constituency—a rural one—the last census referred to manufacturing and a large agricultural element, but distribution and storage are major industries and employers in Shropshire. There is nothing in Shropshire that does not move by diesel-powered truck: it is estimated that 97 per cent. of freight moves by road in rural areas. In that regard, I thank my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) for her generous comments earlier. Haulage is being savaged by the Government. That is an extraordinary feature of their taxation policies, because it is one area of policy which remains 100 per cent. in the Government's hands.

Mr. Alan Johnson: And Europe's.

Mr. Paterson: No, there is no European impact on vehicle excise duty and petrol or diesel duty.
We are talking about a major strategic industry. If we doubled rail investment, it is unlikely that more than about 10 per cent. of freight would go by rail. In 10 years' time, it is likely that 90 per cent. will still go by road. The Red Book contains an astonishing increase in duty: not the escalator of 6 per cent. that we were promised but an increase of 11.6 per cent., which puts 28p a gallon diesel.
Thirty-five per cent. of the cost of running a lorry is diesel, and more than 85 per cent. of the price of diesel is tax. The average small haulier, running perhaps 10 trucks, has had to pay an extra £35,000 a year since the Government came to power, and now the Government have added a further £20,000. That means an increase of

£9 billion to £10 billion in fuel duties in this Parliament. The diesel-petrol escalator is worth more than 1p on income tax.
Our diesel is easily the most expensive in Europe. To fill a large truck with two tanks with 1,200 litres costs £756 here, as opposed to £438 in France or £354 in Luxembourg. I mention those countries because, in September, the French Government, who have a more intelligent attitude to their haulage industry, introduced a rebate to help French hauliers to compete with those of Luxembourg.
Vehicle excise duty is also totally out of line with the duties in other European countries. UK VED for a 38-tonne vehicle is £3,210; in France it is £486; and in Portugal it is down to £308. The Budget contains a savage hike in VED for a 40-tonne vehicle, up to £5,750. That gives a French operator a comparative advantage of £2,700, or about 3.5 per cent. of operating costs.
We discussed this issue in European Standing Committee A this morning, the Minister for Transport in London gaily said that we have lower social costs and management costs; but there is not a haulier in the country making a margin of 3.5 per cent., so our hauliers are already out of pocket on VED alone.
There was a move in the Budget to push people towards fitting catalytic converters so that they can burn ultra-low sulphur diesel. That is a chimera. To convert a Euro 1 engine costs £4,000 and a Euro 2 engine £3,500. The £1,000 rebate is not enough because—this is a critical fact that the Government have completely missed—the fuel does not generate the same amount of energy as ordinary diesel. A large haulier, Newell and Wright in Sheffield, converted 130 38-tonne vehicles and reported an 8 per cent. increase in fuel consumption that cost them £250,000 a year.
There is worse news on ultra-low sulphur diesel: more crude oil needs to be burned to get a given amount, so more carbon dioxide is produced in the refinery as well as more diesel being burned in the lorry. That cannot help the Government's environmental commitments.
The fundamental flaw is that the freight journey has to be made. There is no marginal impact in making freight more expensive, because the load has to be carried. Either it can be carried by a foreign-owned truck or the domestic haulier is forced to go abroad or be put out of business.
The Kyoto accord requires us to reduce emissions by 12.5 per cent. from 1990 levels. According to the Library, in 1990 power stations emitted 54 million tonnes of carbon; road transport 30 million; and other sources 76 million. That is 159 million tonnes in all. However, only 16 per cent.—emitting a maximum of 5 million tonnes—of that traffic was goods vehicles. Therefore, page 84 of the Red Book does not add up. I do not envisage that the carbon dioxide reductions that the Government have promised will come about and I would be grateful if the Minister would explain how they will do so.
I foresee the end of the British road haulage industry as we know it. Today, the Road Haulage Association has been flooded out with calls from people who want to take up its offer of a streamlined package of legal fees and administration costs to flag out abroad. The director general of the RHA has asked:
What can we do to get out from under this Government?


and has said that the association's members are, "voting with their wheels". Nowhere will that be more obvious than in Northern Ireland. All the road hauliers there will be based in the Republic.
The damage to the industry is considerable. According to the Centre for Economics and Business Research, more than 26,000 jobs will go in the haulage industry, but there is worse, as the economy as a whole will be seriously damaged. Every business is made less competitive by the swingeing increase in transport costs and that is particularly so in a constituency such as mine. The load has to be carried. As it is estimated that a further 26,000 jobs will go in the general economy, the job losses will amount to more than 53,000, which is more than the west midlands would lose if BMW took the drastic decision to move Longbridge production to Hungary.
The loss in tax revenue is a bigger down side. In 1998, the Excise lost £411 million. By 2002, it will be losing more than £1 billion in excise duty. I know hauliers who have not filled up a single truck in this country for two years. If they flag out and base abroad, many domestic-oriented British hauliers will be using foreign-purchased fuel. The total reduction in gross domestic product could be as high as £2.1 billion. As my hon. Friend the Member for Tiverton and Honiton said—

Mr. Deputy Speaker: Order. The hon. Gentleman's time is up.

Mr. Colin Breed: I shall take a few moments to deal with the small business aspect of the Budget, and I welcome the new tax regimes. However, I shall concentrate on the venture capital side. Last year, the Chancellor said that venture capital trusts would be reformed, and that initiative will continue this year. Frankly, in the past couple of decades, various Governments have recognised that small businesses are generally under-capitalised. They also suffer from far too much red tape and bureaucracy and from not being able to get skilled employees at the right time.
On under-capitalisation, it has always been difficult for Governments to inject public money into private businesses, even though small businesses find it extremely difficult to get hold of that capitalisation to provide them with the stability that they need to allow them to grow successfully and provide employment opportunities.
Far too many small businesses are just about managing. They really are under-capitalised and more than afraid of going to their banks to borrow money. Even if they did so, the banks would not be able to provide the sort of real capital that would give the businesses the stability that they need.
Venture capital trusts have perhaps concentrated on high-tech industries, which offer the opportunity of making not exactly a quick buck, but not a slow one either. They have supported businesses that have the opportunity of a meteoric rise. Such businesses are relatively small and, by their very nature, do not employ many people. Most high-tech businesses have a low ratio of employees.
How are we to help the majority of small businesses to get the capital that they need? I suspect that most of the help has to come from the private sector. Venture capital companies cannot provide low levels of help for small

companies cost effectively. Amounts under £250,000 are difficult to invest and expensive too. However, the fact that venture capital companies and individuals find it difficult to get out of the investment when they want to realise some of the profit is one reason for those high-risk reward profiles. The reason for that is largely the huge hurdle between small private companies that have some outside investment and their ability to be listed on the stock exchange or even sell out to another company.
I hope that the Government—perhaps through the regional development agencies—may consider an opportunity to provide an interim step. We have heard from the Prime Minister that he wants us to consider American models. One of those models can be found in what is called the over-the-counter market. It offers an opportunity for private individuals, small venture capital companies and regional operations to invest in relatively small businesses that they may know and support. They may know the product or management. They may genuinely support a company that they believe to have good opportunities for growth.
Such a company cannot go to the stock exchange, and it is not cost effective to get in small amounts either from venture capital trusts or from small venture capital investments by bigger companies. The opportunity exists for private individuals and regional investment companies to support indigenous small business—not necessarily high-tech business, although they could be included.
I believe that a number of private individuals would welcome such an opportunity. Many people who are reasonably well off and who have decent investment portfolios sometimes find it rather boring to receive a return on their investments that is broadly the FTSE average. They would like something a bit more spicy for their money or something more local with which they can have a closer connection. Yet there is no such opportunity in the United Kingdom.
Some years ago, the Conservative Government tried to provide business expansion schemes. I am sorry that the schemes were largely misused for property companies, in which there was little risk, simply so that a tax shelter could be achieved for investment. That idea was not successful, but that does not mean that the intention was not right. I believe that opportunities must exist between the situation in which individuals put relatively small amounts of money into family businesses and that in which venture capital companies seek to invest the £250,000 or £500,000 that would make their investment both cost and time effective.
I am talking of investment of between £50,000 and £250,000 in companies that have been going for perhaps two or three years and which have an opportunity to expand. That level of investment simply is not available. Because of the nature of venture capital trusts, it is not likely to come from them. Such investment is equally unlikely to be attractive to some individuals because of the lack of opportunity to move the company on to the next stage and to realise a return on their investment.
I hope that the Treasury will examine the American models and consider how regional development agencies might be able to assist local or regional over-the-counter markets to provide opportunities for individuals to invest in small companies that they may know or wish to support. They could provide an added opportunity for real investment that would cure the under-capitalisation of much small business.
Successive Governments have recognised the problem, but have found it difficult to provide a model for putting public money into private companies. The Government must try to provide the means by which private individuals may more successfully promote and invest in small businesses.

Mr. David Heathcoat-Amory: My hon. Friend the Member for South-West Hertfordshire (Mr. Page) said that he was initially rather impressed by the presentation of the Budget speech, but became progressively disillusioned as he read the detail. I completely agree. We have learned from the Government that the packaging may be good, but the substance always turns out to be disappointing. The rhetoric of the Budget speech is beginning to fade, and we are faced with the reality of the Budget as set out in the Red Book. We have always known that this is a tax-raising Government—they broke all their promises on tax within a few months of taking office in their first Budget—but that reputation was confirmed in yesterday's Budget statement.
The Chancellor had an opportunity to repair the damage of the first two Budgets, because, as a result of the earlier tax increases, tax revenue is buoyant. He could have reversed earlier tax increases, but he did not. Therefore, if all the Budgets are taken together, the Government are committed to a £40.7 billion tax increase during this Parliament. That figure is derived from Government documents and was not materially altered by the Budget we heard yesterday. Therefore, the supposed tax reductions, and the other handouts and benefits, are funded from other tax increases in the same Budget or from previously announced tax increases that will take effect in the coming financial year.
Naturally, the Chancellor did his best to try to disguise those facts, but they have been exposed by Conservative Members in the debate today. My right hon. Friend the Leader of the Opposition started the process earlier today when he pointed out that the Chancellor had boasted a lot about the new measures for enterprise and business, while saying nothing in his speech about a much bigger tax increase—the £240 million extra national insurance contributions from the self-employed. That measure is coyly referred to in the Budget report as a reform of the contribution system.
A helpful press release provided a list of some of the enterprise measures. Some are well meaning and may have merit and we shall scrutinise them carefully when we come to the Finance Bill, but they are essentially tinkering at the margin. A £20 million venture capital challenge is all very exciting, but it hardly offsets the £25 billion extra burden of business taxation that the Government have already levied.
Nor have the Government learned the lesson that one of the best things that Government can do for businesses, especially small businesses, is to stay out of the way. My hon. Friend the Member for North Norfolk (Mr. Prior) and others referred to the regulatory burden and pointed out that businesses usually do best when they have least to do with Whitehall and meddlesome Ministers who have no business experience. To take just one example, the working time directive is contained in 72 pages of

guidance, and even that is called a basic guide. The minimum wage regulations take up 112 pages. It is not surprising that the British Chambers of Commerce have estimated that the extra regulations so far in this Parliament will impose an extra burden on British businesses of £5 billion every year. If the Government really wanted to help business, they could start by simplifying those regulations. Instead, they have decided to set up a new body called the Small Business Service, which will give businesses advice on how they can comply with all the regulations. Businesses do not want new bodies: they want simplified regulations and fewer of them.

Mr. O'Neill: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: Will the hon. Gentleman forgive me for not doing so? I would normally give way, but I want to answer some of the points raised in the debate, including his. I am short of time and the Paymaster General has to speak as well.
Two weeks ago, the Prime Minister went to Milan to speak to the socialist convention, where he lectured his European Union colleagues on how they should adopt the United States business practices of low taxation, fewer regulations and less Government interference. That is what he said, but it is not what he does—instead, he is converging on the wrong economy. If he really believed what he said, why does he not have a convergence programme with the United States? Instead, we are converging with the European Union economies. The EU is increasingly a high-tax, high-cost, high-regulation, high-unemployment zone, yet it is that disease which the Prime Minister invites this country to catch all over again. It is hardly surprising that his remarks were greeted with amused contempt by his colleagues, who pointed out—if not to him then certainly to each other—that he was telling them to adopt the US model while doing the opposite in his own country, as demonstrated by yesterday's Budget.
Increased regulation is not the only problem. My right hon. Friend the Member for South Norfolk (Mr. MacGregor) complained about additional complexity in the tax system. Take stamp duty: the Chancellor inherited two rates of stamp duty, but now we are to have four. The right hon. Gentleman said, completely misleadingly, that the measure was all about householders and that only those who buy expensive houses will pay the additional rate—but most stamp duty is paid by the commercial sector, so it is the firms and enterprises that the Chancellor says he wants to help which will pay the additional taxation. The same is true of corporation tax; the Chancellor inherited three bands of corporation tax, but now we are to have five. The story is the same on income tax; the right hon. Gentleman inherited three bands, but now we are to have five. Massive additional complexity is being built into the tax system with which the Chancellor expects people to comply.
The much-leaked l0p rate of income tax is advanced as a means of tackling poverty, but if the Government were really interested in tackling poverty, they would take people out of taxation altogether, because a l0p tax band is not a good way to help people on lower incomes. If the Government are serious about helping people on the bottom of the income scale, they should reverse


the disgraceful decision to end the repayment of dividend tax credits to non-taxpayers—a matter we debated a few months ago. There are 300,000 non-taxpaying pensioners who, from April this year, will not be able to reclaim those dividend tax credits. They are among the most disadvantaged people in the country, yet the Government have decided to do nothing to help them.
Instead, the Government are bringing in a 10p rate of income tax, but, as my hon. Friend the Member for Banbury (Mr. Baldry) pointed out, abolishing the 20p band, which the Government are doing simultaneously, pushes people upward into the higher 23p band as well as downward into the new l0p band. That has been spotted by commentators outside the House, and David Major, a partner in Deloitte and Touche, is quoted in today's newspaper as saying:
There may be an illusion that he has given something away with the l0p band…What he has done is to abolish the 20p band to more than pay for the l0p band.
There we have it—another example of stealth taxation. The Chancellor says that he will bring in a tax credit for children, but he will do so a full year after he abolishes the married couple's allowance. Therefore, for a full year he has the benefit of the money from abolishing one allowance before giving some of it back to some people by introducing a measure of greater complexity in a future Budget.
We have also heard about the relentless increase in indirect taxes, especially excise duties on tobacco and fuel. My hon. Friend the Member for East Yorkshire (Mr. Townend) raised the issue of tobacco smuggling, which has become epidemic and results in lost revenue of at least £1.5 billion a year, perhaps more.
It is noticeable that the Budget report now estimates that the revenue from tobacco will be £7 billion next year. However, last year's pre-Budget report estimated that the revenue would be £8.9 billion, so nearly £2 billion in revenue has suddenly disappeared. I think I know where it has gone: it has gone overseas or been lost through smuggling. In giving his reasons for increasing tobacco taxation, the Chancellor referred to the importance of dissuading young people from starting smoking. However, if they buy tobacco from uncontrolled outlets in clubs, pubs and car parks, they are more likely to take it up.
When in opposition, the Prime Minister was fond of saying that we should be tough on crime and tough on the causes of crime. The cause of this crime is the Government's widening even further the gap between our rates of duty and those of continental Europe. It is a particularly odd policy move from a Government who are committed in principle to tax harmonisation in Europe— indeed, the Paymaster General, who is about to reply to the debate, chairs a Committee on tax harmonisation. Yet the Government are doing the opposite at home: they are disharmonising and making the gap bigger.
Another example is fuel duties. I agree entirely with my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) who said that increased fuel duties are particularly unfair on the rural motorist for whom a car is not a luxury, but a necessity. The rural motorist was abandoned long ago by this Government. My hon. Friend the Member for North Shropshire (Mr. Paterson) highlighted another serious problem. He has done a tremendous amount of work raising the profile of this issue, so the Government are fully aware of it.
Quite simply, the British haulage industry is being rendered uncompetitive in European terms as a result not of anything that it has done, but of something the Government have done to it. The Government are erecting a green smokescreen: under the guise of an environmental measure, they are piling tax upon tax. That is bad not just for the haulage industry directly but for manufacturing industry as a whole, because all manufactured goods must be transported.
The Government's policy is particularly destructive because they have singled out diesel for special increases. Diesel is the fuel of industry—if the Government do not know that, someone should have pointed it out. We are talking not about the private motorist but about British jobs—particularly those in constituencies with a heavy manufacturing bias. Diesel is to increase by another 12 per cent. Even the low-sulphur diesel, to which the Chancellor said that he would give an "additional tax advantage", has increased by 10 per cent. If the Chancellor is considering any more special tax advantages, I hope that he will think again. I do not want a tax advantage if it means an extra 10 per cent. rate of duty.
The haulage industry must not only try to pass on some of the costs to the rest of British industry—and thereby make it uncompetitive—but must face competition from abroad. We have the most expensive fuels in Europe and there is a smuggling problem in northern Ireland. I tabled a parliamentary question asking whether the Government had estimated the amount of fuel that is being smuggled across the border by criminal gangs and paramilitaries. They replied that no estimate had been made. That is not good enough. We are talking about colossal sums of money which induce criminality. The tobacco and fuel tax increases are certainly bad for individual taxpayers, for industry, for competitiveness, for employment and for the rule of law—and, in the longer term, they are bad for the Revenue as well.
I turn briefly to the overall impact of the Budget. My hon. Friend the Member for Wycombe (Sir R. Whitney) raised, quite rightly, the prospect of a manufacturing recession. The Budget report records that manufacturing output will fall this year by between 1 and 1.5 per cent. That is not only a technical recession, but a severe one. My hon. Friend also said that he does not believe the Government's growth forecasts. They, too, are optimistic. Almost all outside commentators estimate growth to be well below Government estimates, not only this year but next year. That would make any manufacturing recession even worse.
The hon. Member for Harrow, West (Mr. Thomas) spoke eloquently in favour of an energy tax, but, if that is introduced, it will be another hit on manufacturing industry. He may have put forward a good environmental case, but he entirely overlooked the industrial damage that will be caused.

Mr. O'Neill: I want to make two points. First, if there are to be energy taxes, they must be fiscally neutral, and the Government have accepted that. The attack on my hon. Friend the Member for Harrow, West (Mr. Thomas) and the general thrust of the right hon. Gentleman's argument therefore has no substance. Secondly, vehicle excise duty is a complicated issue and there is much special pleading by the road haulage industry. Some of us have sympathy with the industry, but VED will not


necessarily undermine the opportunities available manufacturing industry in this country. The Oppositie spokesman has not done justice to that case—

Mr. Deputy Speaker: Order. The hon. Gentleman's intervention has been far too long.

Mr. Heathcoat-Amory: It is intolerable that a well-considered case advanced by the British haulage industry should be dismissed as special pleading by Government Members in that way. The industry has made a good case, which the Government have not answered at all. The industry would have more respect for the Government, as would we, if its case for a lower or non-existent escalator had been answered by Ministers. We shall shortly hear a reply to the debate and we shall give the Paymaster General an opportunity to answer that case, but so far we have heard nothing.
On the fiscal neutrality of the energy tax, we should be forgiven for being a little cynical about whether the Government will pocket something along the way.

Mr. Gareth R. Thomas: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: If the hon. Gentleman will forgive me, I will not because I am answering some of the points that he made.
By definition, the firms and sectors that pay the tax will not be those that will be reimbursed from the revenue. Manufacturing, as a whole, will pay more than its share of the tax, and the money will flow back to different sectors, mainly the service sector. There will be a net distribution of wealth from manufacturing to the service sector. I hope that hon. Members with large manufacturing concerns in their constituencies—I certainly have some in mine—will bear that in mind before they advance the case for the tax on environmental grounds alone.
The estimates on which the Budget is based are extremely shaky. My right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), who has told me that he cannot attend this part of the debate, put forward the good idea that the National Audit Office should audit and check parts of the Budget that it is excluded from auditing at present.
The Government have given in on unemployment. They used to assume that it would simply be flat. They have now agreed that it is more realistic to accept the National Audit Office assumption of an increase in unemployment over the next few years. I am afraid that very little in the Budget will prevent that 400,000 increase in unemployment that the NAO is projecting.
All the Government schemes in the world will do nothing unless the economy generates real new jobs, and the Government keep taxes down and reduce the cost of employing people. I do not believe that the Government have understood that message. If they have understood it, they have not acted on it. They are squandering the golden economic legacy that we left to them, and the country as a whole will pay the price.

The Paymaster General (Dawn Primarolo): The official Opposition have been whistling in the wind this evening to keep up their spirits in the face of the congratulations that the Government have received on their economic policies and yesterday's Budget, from sources that range from the International Monetary Fund to the mother of the Leader of the Opposition, Mrs. Hague.
During the debate, the Opposition adopted not so much a kitchen table approach as a pick-and-mix approach. The quote from the hon. Member for Tunbridge Wells (Mr. Norman), who welcomed the help for small business in the Budget and described the Budget as not bad for business, was not echoed by many of his hon. Friends, despite the fact that the hon. Gentleman is vice-chairman of the Conservative party.
The comments of the shadow Chancellor, who described MIRAS as having outlived its usefulness and said that it should be abolished—the sooner the better— were not echoed in the Opposition's official policy this evening, presumably because the shadow Chancellor had to rush off to the shadow Cabinet meeting. The shadow Secretary of State for Trade and Industry suggested that we had deliberately timed the debate in order to deny him the opportunity to attend that meeting.
The Leader of the Opposition said that if we were going to phase out the married couples allowance, we should replace it with a better-targeted allowance for families who need help. That is precisely what we have done, but did the Opposition stick to that policy? No. They are into their kitchen table pick and mix.
The Opposition could not explain why Sir Ronnie Hampel, chairman of ICI, welcomed the overall approach of continuing the direction adopted, in order to strengthen the foundations for business growth; nor could they explain why Alan Leighton, the chief executive of Asda, said that he welcomed the Budget and called it a Budget for individuals, a Budget for families, a Budget for enterprise, saying that the benefits that it will bring will flow through to every sector.
The Opposition could not explain why they disagreed with Lord Harris, the chairman of Carpetright, who said:
I think it is a good budget for my business. This is a budget that will help people to spend, especially at the bottom end of the income scale.
Throughout the debate this evening, the Opposition complained about what they did not like, denied what they had been committed to in government and said nothing about what they would do to tackle the skills shortage, investment, the productivity gap, help for families, incentives to help people into work and investment in our small businesses. They speak of their golden legacy, but even they do not believe that they left us one, because they cannot tell us now what they would do to help the economy.
In their many contributions to the debate, my hon. Friends touched on various aspects of the Budget. My hon. Friend the Member for Ochil (Mr. O'Neill) welcomed the Small Business Service and said how important that would be. He welcomed the Marshall report and, in an intervention on the right hon. Member for Wells (Mr. Heathcoat-Amory), he re-emphasised the importance of taxing the bad and helping the


good—exactly what we are doing—to deal with the issues and challenges arising from the Kyoto conference and our international obligations on greenhouse gases.
My hon. Friend the Member for Harrow, West (Mr. Thomas) made an interesting speech, going further than the Budget with regard to environmental commitment, but, none the less, raising important points about how to tackle the environmental problems that we face.
My right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) underlined the importance of the Budget in helping those in most need. My hon. Friend the Member for Worcester (Mr. Foster) reinforced that point, but went on to deal with the importance of introducing employee share ownership.
My hon. Friend the Member for Lincoln (Gillian Merron) also made important points about how many families and pensioners in her constituency will benefit from the Budget, and those points were echoed by my hon. Friend the Member for Jarrow (Mr. Hepburn).
My hon. Friend the Member for Watford (Ms Ward) spoke of a meeting today in her constituency at which pensioners told her that there is something for everyone in the Budget, and a bit more for those who need it most. She summed up the assessment of the Budget across the board. Even the Institute for Fiscal Studies had to admit that as a result of its analysis today. A single pensioner will now receive £500 a year more than when the previous Government left office and pensioner couples will receive £800 a year more.
Central to the Government's strategy is the need to tackle the employment and poverty traps, to deal with skills shortages and to encourage investment in our economy.
Opposition Members referred to the fuel escalator. The hon. Member for Tiverton and Honiton (Mrs. Browning) said that it was a policy which she had been unhappy with for some time. Presumably, she was alluding to the fact that it was her Government who introduced the fuel escalator, and even though she was unhappy then, she decided not to say anything, and has only now discovered the problem.

Mrs. Browning: I articulated that on several occasions. The hon. Lady might like to know that, during one television interview that I gave after a Conservative Budget, someone said that I sounded less enthusiastic than the Liberal Democrat representative.

Dawn Primarolo: The hon. Member for Eastleigh (Mr. Chidgey) may wish to take that up with the hon. Lady, but perhaps not now.
Just to reinforce the point, the policy that the hon. Lady now decries was started by the Conservative Government for good environmental reasons, but she wants to forget that. That is part of the previous Government's amnesia.

Mr. Townend: Will the hon. Lady accept that the Conservative party has changed its policy? [Laughter.] How can she laugh when new Labour has changed all the policies of old Labour? It is no longer in favour of nationalisation and wants to privatise; it now supports business and enterprise. It has changed its policy. Will she not accept that we have changed ours?

Dawn Primarolo: I offer the hon. Gentleman a challenge. When he can come to the Chamber and tell

us the united policies of Conservative Members, we will consider listening to them. Not only do the hon. Gentlemen and his hon. Friends want to forget the 18 years of Conservative Government and encourage the electorate to pretend that they never happened: they now think that they can have opposition without responsibility and without policy. But perhaps that is a bit unkind. They probably want opposition with 1,000 policies, because each of them needs to change his policy each day.

Mr. Lansley: Does the Minister still subscribe to the view expressed in the Labour manifesto that it is an explicit objective of a Labour Government to raise the trend rate of growth of the United Kingdom economy? On what assumption about the trend rate of growth is the Budget based and why has she not subjected that assumption to audit by the National Audit Office?

Dawn Primarolo: The hon. Gentleman is avidly reading the Red Book so he will see what we are doing in a whole range of areas—tackling the productivity gap, investing in skills, investing in small business and creating sustainable growth. That is precisely what the Government are about.
The Budget is locking in the economic stability that the Government are creating and sustaining. We are introducing a small business tax rate of l0p. We are rebuilding our public services with extra resources for school books and for accident and emergency departments. We are making work pay with a new l0p starting rate of tax and a cut in the basic rate of tax to 22p next year. Conservative Members say that, somehow, the disappearance of the 20p rate means that people are not better off, but they should study their figures a little more closely. People are better off as a result of the l0p starting rate.

Mr. Townend: By how much?

Dawn Primarolo: The hon. Gentleman shouts his intervention across the Chamber, but I will take it. Individuals will be better off by in excess of £300.

Mr. Townend: rose—

Dawn Primarolo: I think that I have answered the hon. Gentleman's question.

Mr. Townend: Will the Minister tell the House how much the average taxpayer will save with the l0p rate, given that the Government have done away with the 20p rate? According to my calculations, the £150 saving comes down to £60.

Dawn Primarolo: For people in 2 million households, the measure halves the rate of tax that they will be paying. I am sure that the hon. Gentleman can understand that clearly.
The Budget is about locking in economic stability, controlling public finances, ensuring that we are investing and ensuring that we cut borrowing and continue to do so. It is about raising—

Mr. Paterson: Will the Minister give way?

Dawn Primarolo: I do not have time to give way. I apologise to the hon. Gentleman.
The Budget is about raising productivity on a foundation of stability. We must work to raise productivity. We must deliver better skills, innovation, competition, information technology and a secure environment for small businesses. Yesterday's Budget introduced seven major reforms for a knowledge-based enterprise economy, opening it up for all. The Budget invests in families by ensuring that the new children's tax credit will maximise support to those families with the lowest income. It raises child benefit, which the Conservatives froze, to a higher level than at any time since its introduction.
The Budget gives a fair deal to pensioners, with £100 for the winter payment and a guaranteed minimum income which will be linked to earnings. It will build a better society, which will ensure that we have a fairer society in which we support each other and ensure that there is opportunity for all to fulfil their potential. The Budget is about making sure that nobody is excluded; everybody should be included in the prosperity of our nation.
The Budget is about helping the British people. Conservative Members are interested only in helping themselves. When they talk about the Budget, they deny their past and want to take the credit for our future. They will be sorely disappointed. This is a popular Budget. It has been widely recognised as such and welcomed by this country as a way forward for the Labour Government.

It being Ten o 'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

Orders of the Day — Testicular Cancer

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hanson.]

10 pm

Ms Linda Perham: It is estimated that a third of all men will develop some form of cancer. Worldwide, the number of cases of testicular cancer has risen: the number of cases has doubled in 20 years, and is expected to double every 20 years on the basis of today's trends.
The increased incidence of testicular cancer is linked to a decline in sperm count. Cases of prostate cancer are also increasing. Scientists have predicted that, in 20 years' time, one in four men may risk developing prostate cancer. That is double a woman's risk of developing breast cancer.
I decided to speak about testicular cancer in order to draw attention to the work of a charity called the Orchid Cancer Appeal. It was started by one of my constituents, Colin Osborne, who was diagnosed as suffering from testicular cancer in 1994. He was one of approximately 1,500 men who are diagnosed every year.
During Colin's treatment, his chance of survival kept falling. First it was 80 per cent.; then it was 40 per cent.; then it was 20 per cent. That was very worrying not only for Colin, but for his wife and family: his wife had become pregnant with their second child at the same time as his diagnosis. Through his determination and courage, however, Colin managed to get through all his treatments.
During Colin's treatment, he was aware of the financial crisis affecting the men's cancer unit that was treating him. The unit, led by Professor Tim Oliver, is based at St. Bartholomew's hospital, in the department of medical oncology. As well as providing care for patients in east London through its partnership with Oldchurch hospital, it has links with the major cancer centres in Essex and East Anglia as part of the Anglian germ cell cancer group comprising Southend, Colchester, Norwich, Ipswich and Cambridge.
Colin knew that, without the work of the unit, he would probably not be alive, and that inspired him to do something to help the unit. He started a fund-raising organisation—the Orchid Cancer Appeal. He gained great support, and the first event raised £20,000. In July 1997, the Orchid appeal was recognised by Diana, Princess of Wales, and a donation was made by the Princess of Wales's charities trust. The Orchid Cancer Appeal is now a registered charity. It has attracted a number of high-profile celebrity supporters, and boasts Michael Parkinson as its president, Steve Davis—the snooker champion—as patron, and other sporting stars as vice-presidents, such as 1966 world cup winners Sir Geoff Hurst and Martin Peters, and the former Wimbledon champion Pat Cash.
I have been very impressed by Colin's tenacity and commitment, and his fighting spirit. Ever since my invitation to the launch of the Orchid appeal in October 1997 at Planet Hollywood, I have been a firm supporter, attending fund-raising events and sponsoring a reception in the House of Commons in November 1998.
The aims of the appeal are to
sponsor more research into the diagnosis, prevention and treatment of the cancers involving the male sex organs",


such as testicular and prostate cancer, and to target aspects of cancer research and treatment. In comparison with women, men are not very aware of their risks of cancer. Many men do not know that they have a prostate gland, let alone what function it performs; yet cancer of the prostate is the commonest cancer in men after lung cancer, and its incidence is rising fast. The same lack of awareness is prevalent in young men with regard to testicular cancer.

Jane Griffiths: Is there not a pressing need for young men to become aware of the possibility of contracting testicular cancer, which, by and large, strikes young men? Should not parents and teachers instil that awareness in them, and encourage them to examine themselves?

Ms Perham: I appreciate my hon. Friend's intervention. As she knows, testicular cancer predominantly affects men aged between 15 and 40, yet few regularly check for lumps. The fact that it affects 15-year-old boys makes it important that parents make their sons aware of potential problems. I pay tribute to my hon. Friend the Member for Reading, East (Jane Griffiths), who has started the all-party group on male cancers and is involved in the Everyman campaign to combat cancer.
The Orchid Cancer Appeal is raising funds to support three research developments. The first is to develop new diagnostic tools both to detect the cancer without needing to lose a testicle to make the diagnosis—which happens at present—and to investigate the cause of declining sperm count, which is now known to be a major precursor of the cancer.
The second is to support a combined clinical and laboratory programme aimed at translating new knowledge on the genes that are involved in making testis cancer sensitive to chemotherapy to develop a new approach to treating prostate cancer. The final programme is to support epidemiological research into understanding what causes the large difference in prostate cancer deaths between the west, which has intermediate incidence, the middle and far east, which has low incidence, and Africa, which has high incidence.
Testicular cancer, which starts as a lump in the testicle, quickly enlarges and then seeds to glands in the abdomen. It then seeds to other organs such as the liver, lung and, ultimately, the brain, via the bloodstream. If the cancer is caught early on, only one testicle may need to be removed.
The way in which to treat testicular cancer has, until now, been to remove the infected area, or to undergo a course of chemotherapy. Chemotherapy is often very distressing for the patients. Hair loss and severe infections can occur in the short term because of the treatment.
Recent research has involved developing ways in which to give shorter courses of chemotherapy to patients who have early highly curable diseases. There is now a one-day treatment without hair loss. That is proving to be as good as radiotherapy for stage 1 seminoma. New evidence shows that two thirds of patients may have damage in the other testicle, so attempting to conserve the
testicle with the tumour is becoming ever more important, especially as the victiMs of the disease are usually young, as my hon. Friend the Member for Reading, East (Jane Griffiths) has pointed out.
Testicular cancer is the most common form of cancer in young men aged 24 to 35. If the testicle were to be removed and the other testicle became infected, a young man could be left infertile. That could be very sad for the men affected, adding to the stress and worry already caused by having such a disease.
Testicular cancer is an unusual cancer because it can sometimes be eliminated very quickly; the cancer is particularly susceptible to treatment. The number of drugs that work when other, more conventional drugs have failed to work is increasing. That sets apart testicular cancer from other cancers, and scientists are asking whether they will be able to learn something valuable from a study of the cancer, which could help in the treatment of other cancers.

Dr. Ian Gibson: Does my hon. Friend agree that the work of BACUP—the British Association of Cancer United Patients—and the Cancer Relief Macmillan Fund in advising patients about the problems and looking after them in the traumatic period, has been important? Does she further agree that, because of the success in testicular cancer treatment, we now need to look at reducing the doses of drugs that are given to people because secondary cancers may develop later in life among those young people? It is a British success story in that our cure rates are as good as anywhere else in the world. Now we can think about reducing the number of drugs and the amount of drugs that are given to patients.

Ms Perham: I thank my hon. Friend for making those points. I pay tribute to him as chair of the all-party group on cancer. I congratulate him on his inspirational, energetic work in focusing attention inside and outside the House on cancer issues.
One scientific discovery often leads to another. That has happened in the advance of treatment for testicular cancer. New knowledge from bone marrow transplantation and leukaemia treatment has led to a development. Patients can now be given double the dosage of chemotherapy that was previously considered to be acceptable. The research has helped patients who have not recovered after one or two conventional treatments, and has led to more research, which has opened up treatments for more common adult cancers, such as cancers of the breast and the bladder.
Currently, improving resistance to, and the early detection of, testicular cancer is regarded as the best way of improving long-term survival. Research is being conducted into screening techniques for testicular and prostate cancer, and into the genes involved in making testicular cancer so sensitive to chemotherapy—in the hope that scientists will be able to make prostate cancer, which is currently resistant to chemotherapy, respond like testicular cancer. If the relevant genes can be identified, potential hereditary risks can be recognised.
The Royal Hospitals NHS trust's men's cancer unit has conducted research into the part that diet plays in developing cancer. Poor nutrition, particularly lack of vitamin A, is increasingly thought to be a factor in many


different types of cancer, which may help to explain the large number of deaths from cancer around the east end of London.
I am so impressed with what Colin has done with the charity. By learning from a cancer for which we have a 95 per cent. cure rate, we may learn to develop treatment for currently untreatable cancers.
The Orchid appeal is initially focusing on east London and East Anglia, not least because Colin Osborne is a north-east Londoner, but also because of the relative lack of funding in those areas in the past 15 years. There are plans, however, to work towards achieving national and overseas targets as part of the charity's research. That may be helpful in explaining why there is global variation in the incidence of testicular and prostate cancer. The funding issue is the obvious reason why the appeal has been started.
In a written answer given, on 9 November 1998, to my hon. Friend the Member for Bolsover (Mr. Skinner), central records showed that totals of over £18 million for breast cancer research, over £10 million for cervical cancer research, and a mere £265,000 for prostate cancer research were provided in the five-year period 1993–98. In the past few years, much good work has been done to highlight women's cancers. There is now a very active and well-supported all-party group on breast cancer. I am therefore very pleased, as I said, that a new all-party group on male cancers was formed on 17 November 1998.
I have already paid tribute to my hon. Friend the Member for Reading, East, who has been very active in working with the Everyman campaign of the Institute of Cancer Research. I should like to mention also the hon. Member for Mid-Dorset and North Poole (Mr. Fraser), who, on 12 May 1998, initiated a debate in the House on the subject of prostate cancer screening.
I am very encouraged by the interest and support shown by hon. Members. I hope that my hon. Friend the Minister will join me in congratulating my constituent, Colin Osborne, and all those who have been involved in the Orchid Cancer Appeal on their work in promoting awareness of male cancers. I should like my hon. Friend also to give some indication of the Government's view on the future of screening, treatment and research into cancers affecting men.

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): I warmly congratulate my hon. Friend the Member for llford, North (Ms Perham) on raising the subject today, and on her very thoughtful and constructive comments. I also join her in applauding and congratulating Colin Osborne on his strength and determination, not only in his fight with cancer, but in continuing the fight for all other men through the Orchid Cancer Appeal—a charity that Colin established and which raises considerable sums for research.
Little is known about the causes of testicular cancer. There may be a family history of testicular tumours, and northern Europeans have a greater incidence of the disease than do southern Europeans, with Denmark having the highest percentage of cases. The cancer is rare in non-Caucasians, except among Maoris in New Zealand. Similarly, the causes of prostate cancer are poorly

understood—although we know that a family history increases the risk of developing the disease. There is evidence also that a high-fat and low-vegetable diet increases the risk.
Therefore, unlike lung cancer—of which we know that smoking greatly increases the risk—we are not yet able to advise men of ways in which they might reduce their risk of developing prostate and testicular cancer. There are other steps that we can and are taking, but, because so little is known about these cancers, the Government are committed to raising self-awareness of symptoms so that early diagnosis and referral can be made. I shall say a few more words about that in a moment.
My hon. Friend referred to the incidence of the disease and its mortality rates. Testicular cancer is the most common cancer in men in the UK aged between 20 and 34, an age at which cancer is comparatively rare. Around 1,000 new cases in total are registered each year, over half of which occur in men under 35. Incidence rates are rising for both testicular and prostate cancer, but it is encouraging that the overall mortality rate for both cancers has fallen. Indeed, for testicular cancer the death rate halved in the 20 years to 1992, and there has also been a welcome, but modest, fall in mortality rates for prostate cancer since 1993. However, the fact remains that prostate cancer is second only to lung cancer as a cause of cancer deaths in men.
As the Orchid Cancer Appeal recognises, research into the causes and treatment of these cancers is vital. The Government are firmly committed to encouraging research into the causes, prevention, early detection and treatment of all cancers, including testicular and prostate cancers. The Department of Health spent £8.4 million on cancer research in 1996–97. The Scottish Office spent a further £500,000 and, as part of the NHS research and development programme, an additional £1.2 million has been spent.
The research and development strategic framework for the use of the national health service R and D funding is being reviewed. As part of that review, five topic working groups have been established to consider research coverage in key areas. One such group is considering cancer. The outcome of the reviews will help guide future priorities for research expenditure through the NHS research and development levy.
The main agency through which the Government support biomedical and clinical research is the Medical Research Council. The council, as many hon. Members will know, is an independent body deciding what research to support according to its own expert judgment. The council spends, on average, £13 million a year directly on research into cancer, and much other research funded by the council is also relevant to our understanding of cancer—for example, research into genetics and health, the immune system and infections.
One area in which there is considerable scientific interest is recent evidence that has suggested a possible role for environmental oestrogens, which have been linked to falling sperm counts. As my hon. Friend mentioned, some reports suggest that there is a connection between low sperm counts and testicular cancer. The United Kingdom, I am glad to say, is playing an important part in international activities in this field, not least through the Medical Research Council's reproductive biology unit, and the Institute for Environment and


Health. However, despite a lot of research, it is still not clear that sperm counts have been falling over the years and we know of no evidence that low sperm counts, as such, indicate a risk of developing testicular cancer.
In April last year, we announced a £1.7 million programme of epidemiological research over three to four years into the possible relationships between chemical exposure, sperm counts, and penile congenital abnormalities. This is a joint programme involving three Government Departments and the European Chemical Industry Council. We are also funding an 18-month epidemiological study of testicular cancer, prostate cancer and the condition now known as—I am going to have trouble with this one, Mr. Deputy Speaker— cryptorchidism, in which the testicles have incompletely descended, which is known to lead to an increased risk of testicular cancer.
On the subject of screening and awareness, there is currently no certain method by which a man can reduce his risk of developing testicular cancer. There is also no effective screening method for testicular cancer, so the focus must be on raising awareness, early detection and high-quality treatment.
The Department of Health launched a campaign to encourage testicular awareness in the hope of reducing death from this disease. The Department, in conjunction with the Imperial Cancer Research Fund, published the leaflet "A Whole New Ball Game" in the summer of 1995. Distribution of the leaflet is targeted on the age group most at risk, young men at universities and sixth form colleges, as well as GP surgeries, pharmacies and so on. The aim is to make men aware of what is normal and, when there are any unusual changes, to realise the importance of contacting a doctor early to ensure the maximum chance of cure.
There is also no method by which a man can reduce his risk of prostate cancer. Of course, there are calls for the introduction of a screening programme for prostate cancer. The Department of Health's standing group on health technology therefore made prostate cancer one of its original priority areas for health technology assessment. The Department commissioned two systematic reviews of the diagnosis, management and screening of early localised prostate cancer from the university of Bristol and the Institute of Cancer Research.
The results of the two reviews were published early in 1997. They produced a clear recommendation that the current evidence did not support the introduction of a national screening programme for prostate cancer with the available technology. I am well aware that that recommendation came as a disappointment to many, but it is important to understand the reasons for it.
Current evidence suggests that the introduction of a screening programme would result in unnecessary, painful and potentially harmful treatment for many men. Although prostate cancer can be a killer, the evidence suggests that many prostate cancers are slow growing and unlikely to cause clinically important symptoms during a man's life. Autopsy studies show that 30 per cent. of men over 50 who had no symptoms of prostate cancer while alive had histological evidence of prostate cancer at the time of death. That figure rises to over 50 per cent. in men over 80 years of age.
It is ethical to offer someone a screening test only when it is likely to do more good than harm. Given the lack of evidence of benefit and the possibility of harm, the reviews concluded that a national prostate screening programme could not be justified. It was on the basis of those studies that the national screening committee recommended that there was no case for a national prostate screening programme. Ministers accepted the recommendation, and guidance issued in June of last year advised health authorities that prostate cancer screening should not be routinely offered to patients.
However, prostate cancer continues to be a priority for the Department of Health. The Department's health technology assessment steering committee recently agreed to fund a £200,000, 12-month feasibility study for a trial of treatments of localised prostate cancer. It is expected that the study will lead to further research. The national screening committee continues to keep the position under close review.
I am aware of the excellent work achieved by Professor Tim Oliver of St. Bartholomew's Hospital, who leads the group that includes north-east Thames hospitals, hospitals in Ipswich and west Suffolk and Addenbrooke's. Professor Oliver, who specialises in cancer of the testis, has achieved a formidable 97 per cent. success rate in treating it.
We are continuing to improve cancer treatment and care. Fortunately, testicular cancer is highly susceptible to modern methods of treatment. The survival rate for those with early-stage disease is between 95 and 100 per cent. My hon. Friend the Member for Norwich, North referred to some important advances in treatment. Combination chemotherapy has proved highly successful for patients with metastatic disease and about 90 per cent. can be cured.
The Government are determined to improve services for all cancers, including men's cancers. A great deal of work has already been undertaken to implement the recommendations contained in the Calman-Hine cancer framework and supplemented by subsequent guidance. A key element has been the identification of cancer units and cancer centres and the local agreement about which cancers should be treated at each hospital.
The Government have signalled their commitment to making cancer waits a priority. The White Paper "The new NHS" guarantees that everyone with suspected cancer will be able to see a specialist within two weeks of their GP deciding that they need to be seen urgently and requesting an appointment. Those arrangements have been guaranteed for everyone with suspected breast cancer by April 1999 and for all other cases of suspected cancer by 2000. We recognise that that will be particularly challenging for urological cancers such as prostate cancer. Achievement of the target will bring about real benefit by enabling prompt diagnosis.
Cancer is one of four target areas in the Green Paper "Our Healthier Nation", which set out our aim to reduce the death rate from cancer among people aged under 65 by at least one fifth by the year 2010. Progress on those targets through local partnerships and healthy settings, involving business and workplaces, will have a major impact on the health of men. Health care services will be encouraged to respond to the needs of the local communities—for example, where needs are identified,


consideration should be given to having well men clinics, which could bring male-specific cancer, such as testicular cancer, to attention earlier.

Mr. Tam Dalyell: How much money from the Wellcome foundation is involved here? Can we have an assurance that any lack of screening is not connected with a shortage of financial resources?

Mr. Hutton: I do not have the figures for the Wellcome foundation with me, but I can assure my hon. Friend that resources are not an issue in this case.
The Government welcome initiatives such as the Orchid Cancer Appeal and the Everyman campaign launched by the Institute of Cancer Research last year.
My predecessor—the current Minister of State, Home Office, my hon. Friend the Member for Brent, South (Mr. Boateng)—indicated our support to the first all-party parliamentary group for male cancer. It is through initiatives such as those that we can increase public awareness of the symptoms and need for early diagnosis for those cancers.
My hon. Friend the Member for Ilford, North has done a singular service to the House tonight in allowing us the opportunity to discuss these important issues. I am sure that she will continue to take a close interest in these matters and, together, we will continue to improve the services for our constituents.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past Ten o'clock.